Deductible Interest

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    Deductible Interest

    Hi there

    I have 2 properties, of which one is my principal residence, and the other a BtL investment. The BtL property was financed via it's own BtL loan, as well as funding from my principal property by way of increasing my existing mortgage (releasing equity). My question is can the interest charged on this additional increase placed on my existing Home Mortgage be tax deductible under the BtL rental income? If so, what's the best way to demonstrate evidence to HMRC as this additional funding is consolidated into my first existing Home Mortgage

    #2
    Yes.
    If HMRC ask, you should simply be able to show the money trail from lender to purchase of the BtL investment.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Yes.

      This is where preparing a Balance Sheet can prove useful.

      Comment


        #4
        Similar problem

        Hi, hope it's ok to jump in here with my question as it is very similar to the OP. If not I will start a new post.
        Originally took out a repayment loan to fund deposit on BTL. This was attached to residential mortgage at the time but had a seperate payment plan so I could work out interest for tax and how much was cleared yearly off the loan so the loan was reduced going forward which affected interest etc etc. We then remortgaged on our residential property and everything was amalgamated into one payment (no sub-accounts). I can work out the interest on the loan as it's the same rate as mortage but is there any way of working out how the loan reduces over time? The whole mortgage is interest only but I have been making overpayments. Do I even need to or do I just declare interest on the loan amount at the time we remortgaged. Thanks

        Comment

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          Hi all,

          A friend of mine has been renting out a flat since 2004 and has not declared any of the income to HMRC in all that time.

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          by theartfullodger
          See..
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          by armour
          Fair enough. Thanks for your advice. It is on cash basis.

          I guess it would only save her 50 odd quid anyway, maybe less than £80 once the fine and interest is added. I guess she'll have to swallow that.
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          by Santa Fe
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          by Santa Fe
          Boletus, thank you.
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          by jpkeates
          armour - Sorry, I don't know.
          It might depend on whether you're accounting on the cash basis (in which case I suspect not) or the accrual basis (when it's possible).

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          by armour
          Thanks JP, that's clear. I'll put the bathroom in with the income tax then. I guess it's much of a muchness anyway as the associated reduction in interest and fine will probably equal out.

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          You fill out this form requesting to have rental income without deduction of tax and pay it yourself;

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          The 10% was for furnishings, so built in stuff should be ok to claim.
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          Seems pretty clear there JP. I'll go ahead and alter my calculations

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