Tax on Residential mortgage

[Tassotti]

I have just let out my main residence which I have a residential mortgage on.

I have a consent to let letter from my lender.

As this is proof that the property is now part of my letting business, can I claim back the interest as one would with a BTL mortgage?

Thanks in advance

Tass

[Tax Accountant]

I have just let out my main residence which I have a residential mortgage on.

I have a consent to let letter from my lender.

As this is proof that the property is now part of my letting business, can I claim back the interest as one would with a BTL mortgage?

Thanks in advance

Tass

The interest on the house mortgage is eligible to be deducted as an expense from the rental income from the date the property entered your lettings business. This is the case even if you do not have any consent letter from your lender.

In fact, you are able to remortgage the property, upto the value at the date it entered the lettings business, and be able to claim the interest as an expense of your lettings business. You are free to use the remortgage surplus in any way you see fit, including using it to reduce the mortgage on your new main residence.

Ramnik

[Tassotti]

Thanks again Ramnik.

[Tax Accountant]

Thanks again Ramnik.

You are welcome.

Ramnik

[problemchild]

Hi

Ramnik, does that apply to business premises that are subsequently rented out?

For example, I currently own a business premises worth £500k with a loan of £100k. I intend to rent the premises to my own limited company. Could I therefore re-mortgage the property for £500k and use the surplus funds of £400k to buy a new house and claim the full interest on £500k as an allowable expense?

Thanks in advance.



**********

I have re-read my post and it may not be 100% clear. Basically, can I increase my office business mortgage to 100% of property value and use the funds to buy a house and then subsequently transfer the property to my lettings busienss and then claim the full loan as an allowable expense?

Thanks.

[Tax Accountant]

Hi

Ramnik, does that apply to business premises that are subsequently rented out?

For example, I currently own a business premises worth £500k with a loan of £100k. I intend to rent the premises to my own limited company. Could I therefore re-mortgage the property for £500k and use the surplus funds of £400k to buy a new house and claim the full interest on £500k as an allowable expense?

Thanks in advance.

The residential position applied to properties which were previously used by owner-occupiers and subsequently introduced to lettings business.

Your case is different in that your property is commercial premises. Also you have not stated the history and use of these premises from the date of purchase until now.

Did you want to give instructions to research the answer on a paid basis?

Ramnik

[problemchild]

Thanks Ramnik.

I have no need for this I was asking as it was a way which if possible could have saved me many thousands of pounds of tax every year. I'm sure it could also help other similar landlords.

I have membership to tax specialists and I will ask them this question and post their reply here.

Cheers.