Restructure mortgages for investment purposes?

K

King Kong

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At end of last year I moved out of my PPR in Dublin and bought a new house in the West of Ireland. I have let the original property and now have 3 mortgages - 90k from the first house, 75k top up took out on the first house and 250k for the new house.

The intention of taking out the 75k top up on the first house was that I (mistakenly) believed mortgage interest on this loan would be a valid expense against rental income on the Dublin house.

What I'm trying to find out is whether its worth re-structuring some or all of these loans the more tax efficient. All the loans are with the same provider. Is it legal/possible/sensible to restructure these loans to gain more tax relief from letting the house in Dublin?
 
confused....you say you have three mortgages, one of which is for the new property that you are moving into. If you top up a mortgage, I believe that the total amount of the mortgage increases, but it doesnt split into two mortages.
You are correct in saying if you top up your existing mortgage with the """purpose""" of using the money as a deposit for your new PPR mortgage then you cannot claim interest releif on it.
If you rent out the old house in Dublin you can claim mortgage interest releif on the rental income.
 
landlord said:
confused....you say you have three mortgages, one of which is for the new property that you are moving into. If you top up a mortgage, I believe that the total amount of the mortgage increases, but it doesnt split into two mortages.
You are correct in saying if you top up your existing mortgage with the """purpose""" of using the money as a deposit for your new PPR mortgage then you cannot claim interest releif on it.
If you rent out the old house in Dublin you can claim mortgage interest releif on the rental income.
Click to expand...


You get mortgage interest relief only for interest on a mortgage(or part mortgage) which is used to purchase your principle private residence.

You can offset the interest of a mortgage (or part of) used to buy or improve a rental property against the rental income from the rental property when calculating your rental profit ie your taxable profit
 
Don will you just clarify that for me please ? I always thought you needed separate mortgages for different properties. Are you saying that for example I could get one equity release & use it to buy two different investment properties, as long as I don't claim TRS for my PPR on it ?

I've been wondering about that for a while. How do you show from an interest cert, which interest belongs to which ? Is this only for Irish properties or could it be used for overseas investments also.

Sorry for all the questions but you seem to have a good handle on this.
 
Perplexed said:
Don will you just clarify that for me please ? I always thought you needed separate mortgages for different properties.
Click to expand...
No - it depends on what the money is used for not what property the mortgage is secured on or even how many mortgages there are. If you have a mortgage secured on property A and half of the money is used to buy your PPR property B and half is used to purchase an investment property C then you can claim TRS (in respect of property B) on half the interest and offset the other half of the interest against rental income from property C (even if this is a foreign investment property). You need to apportion out the interest yourself based on how much money is used for what purpose and make sure that Revenue are informed of the details.
 
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