Mortage Interest Writeoff..

[manice74]

Hi,

I'm living in my principal residence (prop #1) - with a small mortage.... Assume I buy a second property (prop#2) - which would then become my principal residence. Prop #1 would then become an investment prop...
Can I remortage prop #1 to buy prop #2 allowing me to write off mortage interest on rental income..?

Assume the same bank holds both deeds and prop #2 is mortgage free.

1) Would banks do this ?
2) Will revenue accept this ?

Thanks for any comments.

 

[Berni]

No, you can't.
Revenue will look at the purpose of the loan, rather than which property it is secured against. Only funds used to purchase the investment property will be deductable.

 

[Mrs Vimes]

I don't know about the banks, but Revenue are quite specific that only money used for the purchase, repair or improvement of the rented house can be written off (at a rate of 75% of interest paid) against the rent. Revenue does not care what security the banks have for their mortgages, only what the money was used for. If you do remortgage prop #1 then only the proportion of that mortgage that is used to pay off the old mortgage is allowable.
Sybil