Mortgage free rental property taxable profit

[Gordon999]

You should get a BTL mortgage on the rental property and use the cash to reduce the mortgage loan on your home property. You need to check with your existing mortgage lender if the mortgage loan can be swapped ( ported ) over.

[King_Maker]

This has come up many times before.

The interest could have been allowable if the correct procedure and paperwork had been followed.

Which property is mortgaged or even if no property is mortgaged is not relevant. It's the purpose of the loan which governs its deductibility. And capital refinancing of a business is such a purpose.

See HMRC's own Manual :

http://www.hmrc.gov.uk/manuals/bimmanual/bim45700.htm

[jjlandlord]

What you can deduct are the interests from the mortgage if the purpose of that mortgage is to finance your rental business.

So I don't think that there is anything you can do...

[pdhmobile]

Hi everyone,

this is the situation, my current house(which is mortgage free) is going to be rented out and we have just bought another house with mortgage that we are going to live in.
We have been told that because the rental house is mortgage free ill have to pay tax on the full anount £525, rather than just profit if i had a mortgage i.e rental £525 mortgage £300 = £225 profit(taxable). Is this the case and if so how can we get round it, reduce the tax bill.
One idea is if I take another mortgage out on the rental one and use the money to do up our new house, is this a possiability??
Hope it make sense, its starting to boil my brain trying to work it all out??!!??

Thanks in advance

Paul