Investment Property top up mortgage interest deductibility of interest

J

jackiepoosie

Guest
I have an investment property with lots of equity. Value is €500K and there is only €100k left on the mortgage.(Property A) I now wish to remortgage property A to release a further €150K in equity to purchase a second investment property(Property B).Is the interest on the remortgage of Property A deductible against:
(i)the gross rent of Property A Or
(ii) against the gross rent of property B OR
(iii)is it deductible at all?
This is not as straighforward as it seems because under revenue guidelines each investment property must "stand alone" when calculating net rental income and then aggregrated together when reaching the Case V total.Can someone point to a definite source to clarify this point? In practice what happens is that the remortgage is generally called an improvement/repair loan in the mortgage document and most people simply would deduct the interest aginst the rental income on Property A. But are they correct?If not what is the correct position? I look forward to hearing some replies!:)
 
As far as I'm aware, the loan is deductible against property B even though the money was borrowed on property A. It does not matter which property the cash was borrowed against, only what it was used to buy.
 
Lightweight. is correct, the interest is only allowed against the source it was borrowed for and not on what it was secured.
 
Hi,
I've just been told by a bank manager that they clarified this with the revenue last week and were told that interest on equity release from one property is not allowable against the income on the new investment property.
This is contrary to what I've believed up to now (although my knowledge was based on posts from this site) so I'm going to contact the revenue myself - will post back when I get a response.
Helen
 
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