Take out mortgage on rental property

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Maya22

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I am a landlord, 1.5 properties owned outright (one shared with sibling). Happy with rent, tenants and all the ups and downs involved with being a landlord so don’t want to sell.

Someone mentioned that I was missing out on interest tax relief by not having a mortgage on at least one of these properties. I’ve paid off the mortgage on my own home. Should I remortgage the rental property I own outright (worth about €250k) and either purchase another property or invest the proceeds elsewhere for a better return? Or stick as I am?
 
Maya22 said:
Should I remortgage the rental property I own outright (worth about €250k) and either purchase another property or invest the proceeds elsewhere for a better return?
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1. Who's going to lend the money to you?
2. Even if you could borrow, it wouldn't qualify for tax relief.
 
Maya22 said:
I am a landlord, 1.5 properties owned outright (one shared with sibling). Happy with rent, tenants and all the ups and downs involved with being a landlord so don’t want to sell.

Someone mentioned that I was missing out on interest tax relief by not having a mortgage on at least one of these properties. I’ve paid off the mortgage on my own home. Should I remortgage the rental property I own outright (worth about €250k) and either purchase another property or invest the proceeds elsewhere for a better return? Or stick as I am?
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If you do, you won't qualify for a tax deduction on the interest in any event, as you won't be spending the proceeds of the mortgage on buying the rental property.

And in any event, there's no point in incurring an avoidable cost just to get a tax deduction on the expense.
 
azerty said:
I might think it totally wrong and I understand that it reduces your tax bill as it reduces your income.
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You are totally wrong and if you know nothing about the subject you shouldn't be risking misleading people.
 
RedOnion said:
1. Who's going to lend the money to you?
2. Even if you could borrow, it wouldn't qualify for tax relief.
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I was going to get a BTL mortgage and then claim the mortgage interest relief in my tax return but I’m guessing that’s not an option and I’ve been misinformed?
 
Maya22 said:
I was going to get a BTL mortgage and then claim the mortgage interest relief in my tax return but I’m guessing that’s not an option and I’ve been misinformed?
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Correct. I'm guessing it wasn't a tax advisor you were talking to.
 
T McGibney said:
No harm in asking here. That's what's the site is here for.

If it sounds too good to be true, it usually is.
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Would you be able to clarify for me how mortgage relief than work? I always thought you deducted the interest paid as an expense from your rental income? (I understand it needs to be a BTL mortgage for actually purchasing a property)
 
azerty said:
Would you be able to clarify for me how mortgage relief than work? I always thought you deducted the interest paid as an expense from your rental income? (I understand it needs to be a BTL mortgage for actually purchasing a property)
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It's the reason why I said that the mortgage still had a cost.
 
RedOnion said:
Then reread the question.
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Ok, thanks for the clarification. I just wanted to point out that the mortgage on a rental property was not a free thing as sometimes people seem to think, it has a reduced cost but still a cost.
 
azerty said:
Ok, thanks for the clarification. I just wanted to point out that the mortgage on a rental property was not a free thing as sometimes people seem to think, it has a reduced cost but still a cost.
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Correct. But still.... there is no tax relief in this case, so the cost is not reduced.
 
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