Claiming back more interest than the original purchase price of a property

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    Claiming back more interest than the original purchase price of a property

    Hi

    This question concerns the amount of interest you can claim against expenses when you let out a property and how you can "re-set the clock" on your rental property.

    I know that it is possible to borrow UP TO the market value of a property AT THE DATE IT IS INTRODUCED TO YOUR LETTINGS BUSINESS.


    See the Inland Revenue's own guidelines - Example Two on the link below
    http://www.hmrc.gov.uk/manuals/bimmanual/BIM45700.htm

    In my case
    Property bought for 60k and rented out for five years
    Moved into property for two years and remortgaged it for 80k to purchase another property and then rented it out again.
    Q1 Does the clock re-set so I can claim up to 80k (ie more than the purchase price)
    Q2 I am now living back in the original (60k) property and want to remorgage it to 120k. If I move out in a year or so can I re-set the clock again and claim 120k interest on the rental property?

    Many thanks

    #2
    Originally posted by Simon Y View Post
    Q1 Does the clock re-set so I can claim up to 80k (ie more than the purchase price)
    Q2 I am now living back in the original (60k) property and want to remorgage it to 120k. If I move out in a year or so can I re-set the clock again and claim 120k interest on the rental property?
    I don't think the 'clock resets' at all - it's all about what you intend toi use the funds for. Ie, if you want to spend the £120K on wine, women and song then it's not claimable; but if it's to fund a new buy-to-let property then the interest on that loan could be offset against the income from the new property. I think.

    Comment


      #3
      Write a letter to hmrc and ask your question on max allowable interest .

      Comment


        #4
        Originally posted by Ericthelobster View Post
        I don't think the 'clock resets' at all - it's all about what you intend toi use the funds for. Ie, if you want to spend the £120K on wine, women and song then it's not claimable; but if it's to fund a new buy-to-let property then the interest on that loan could be offset against the income from the new property. I think.
        Thanks Eric,
        The money is being used to purchase another property that I will move into. I just wondered as I am reintroducing my property back into the rental business whether I will be able to claim back the full interest against tax?

        Comment

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