Mortgage interest & tax

[suejohns]

The house myself & husband live in is at present mortgage free
However, I am planning to keep this current house to rent, draw down capital on it to purchase a new house together

The house we are in (ie which will be rented) is obviously worth considerably more now that when I bought it & so I can raise ~£140k to move.
Can I still claim the interest against future rent for this full amount, since this is 85% of its value now, ie at the point at which I am now 'buying' it to let??
Or does it go on the original price I paid?

Also, if I set up the mortgage for say £100k at interest only & the rest as repayment .... can I always claim interest for a £140k mortgage, or does it reduce with the amount owed as I pay it off??

Hope that makes sense?
Many thanks in advance
S

[Tax Accountant]

The house myself & husband live in is at present mortgage free
However, I am planning to keep this current house to rent, draw down capital on it to purchase a new house together

The house we are in (ie which will be rented) is obviously worth considerably more now that when I bought it & so I can raise ~£140k to move.
Can I still claim the interest against future rent for this full amount, since this is 85% of its value now, ie at the point at which I am now 'buying' it to let??
Or does it go on the original price I paid?

Also, if I set up the mortgage for say £100k at interest only & the rest as repayment .... can I always claim interest for a £140k mortgage, or does it reduce with the amount owed as I pay it off??

Hope that makes sense?
Many thanks in advance
S

You can remortgage your house upto its value at the time you start letting it and all interest will be allowable against rental income.

Regarding your final paragraph, you can only claim interest which has been charged to you. If your mortgage has reduced to say £120,000, do you still expect to be charged interest on £140,000? If not, how can you claim interest which has not been charged to you?

Ramnik

[suejohns]

Excellent ... thank you :)

[Tax Accountant]

Excellent ... thank you :)

OK You are welcome.
Pay It Forward
Ramnik