Borrowing against a buy to let to buy my home, to get tax relief on interest.

T

Taxess

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Hopefully this is the right place for this question.

I currently own a debt free property (worth €1.3m+), however long term i want to rent this property out and buy another property to live in. A broker mention that I could potentially re-finance the loan of the other property against this current house, and that way can claim interest relief off the tax (plus my PPR would be mortgage free). However I can't find much information online about borrowing against a property - other than about equity release and being over 60 (which i'm not nor near that age). Part of the reason why i want to borrow against the house is the amount that i can borrow might be higher than through my salary x4 + savings. In my mind putting up a house worth 1.3m+ as collateral for a loan of say max 40% is a no brainer for the banks, plus the future rental income.

I spoke to someone briefly about it in the bank and they said there are restrictions when comes to equity release, but it's more a mortgage i want as oppose to an equity release scheme.
 
Taxess said:
equity release, but it's more a mortgage i want as oppose to an equity release scheme
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An equity release in that sense is a mortgage.

Taxess said:
A broker mention that I could potentially re-finance the loan of the other property against this current house, and that way can claim interest relief off the tax (plus my PPR would be mortgage free).
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Get proper tax advice. There are pitfalls here, and just because a loan is secured against a rental property does not mean you can get tax relief on the interest.
 
Taxess said:
A broker mention that I could potentially re-finance the loan of the other property against this current house, and that way can claim interest relief off the tax (plus my PPR would be mortgage free).
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This is plain wrong. Not just pitfalls, plain wrong.

If you buy a house to rent, you can claim tax relief on the interest paid.

If you buy a house to live in, you can't.

The security is not relevant.

So if you borrow against a rental property to buy a home, the interest is not allowed.

If you borrow against your home, to buy a rental property, the interest would be allowed for tax purposes.

Brendan
 
Taxess said:
Part of the reason why i want to borrow against the house is the amount that i can borrow might be higher than through my salary x4 + savings. In my mind putting up a house worth 1.3m+ as collateral for a loan of say max 40% is a no brainer for the banks, plus the future rental income.
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I mean, what could possibly go wrong?:oops:
 

Mortgage interest​

You may be allowed claim Mortgage Interest Relief against your rental income. The interest must be from a mortgage [could include any loan] that is used to purchase, improve or repair your rental property. [This could include a swimming pool!]

You can claim Mortgage Interest Relief if you are registered with the Residential Tenancies Board

  • while your property is rented out
  • in between renting out the property as long as you do not live in it during that time.
You cannot claim Mortgage Interest between the time you buy the property and the time you first rent out the property.
 
We used to think the Germans didn't own the house they lived in.

This was often true.

What Hans did was buy a buy to let and rent it to Fritz - claiming all the deductions available.

Fritz would buy a buy to let and rent it to Gunther - claiming all the deductions available.

Gunther would buy a buy to let and rent it to Hans - claiming all the deductions available.

Very logical Germans. No sentiment.
 
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