Offsetting mortgage interest (main property) against 2nd.

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    Offsetting mortgage interest (main property) against 2nd.

    Sorry to bother you, but no helplines have been able to help. This is my last chance before I enter the unknown and i'm worried.... any stars out there?

    I own a £350k house with my wife on a joint tenancy basis (70% her 30% mine). We have a £100k mortgage left in joint names.

    I have sold my old flat and purchased a new property for £120k cash with the proceeds. I intend to rent this property to by brother for a below market price at around £350/month (as he is a bankrupt and I want to help him).

    (1) Am I allowed to *legitimately* rent below market value a i'm worried about the tax view? I can prove thi by contract/standing order receipts etc.

    (2) It was a cash purchase only due to logistical reasons. Really, my original flat sale should have paid off the mortgage on the house i'm living in now and I would have got a mortage for the new property, but I used the proceed cash instead to better strike up a purchase deal an because I was in a rush.

    Can I use the interest on the mortage I have on my own home to offet against the rent I receive on the cash purchased new property? I assume I can transfer the mortgage from house to new property to help me(?) although I would rather not do this for other unrelated reasons - any ideas?

    Regards

    #2
    Please note that in regards to my comments number (2) the flat that I sold I previously withdraw equity which was invested in my current own home. I would take that back to buy the new property but for the fact that I am leving it on my current home so that I can buy the new in 'cash', although if for tax planning it's better to buy with a mortage on the new property then I would do this (or buy in cash then transfer the mortage immediately thereafter)

    Comment


      #3
      1. You can rent it out for whatever you want. However, you must keep the Income Tax calculations separate from any other properties let on a commercial basis.

      2. No. But you could raise a mortgage to re-finance the business and use the proceeds to pay down your home loan or whatever you wish. The relevant interest would be claimable, so long as the loan does not exceed £120,000 (assuming this to be MV when first let).

      Comment

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