Mortgage Interest Relief on PPR & Investment

K

Kaso

Registered User
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Hi, up until last year my now investment property was my principal private residence (ppr). I've since purchased another house with my wife and we now live in this one - our ppr. I claimed mortgage interest relief for about 5 years on my now investment property. I stopped claiming this when I started renting it out as it was no longer my ppr. Can my wife, or both of us, now claim mortgage interest relief on our new (although second hand) house?
 
On your investment property, you can deduct the full interest paid against your rental income for tax purposes. You should convert this to an interest only mortgage and not repay any capital.

You can claim PPR relief on your new mortgage. If you are making capital repayments on either mortgage, for example if you have an ordinary repayment mortgage, you should make those repayments off your PPR first

Brendan
 
Brendan said:
On your investment property, you can deduct the full interest paid against your rental income for tax purposes. You should convert this to an interest only mortgage and not repay any capital.
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Why do you say he shouldn't repay any capital? I understand that it may be in his interest to maximise the amount of interest claimable against rental income but surely the decision to repay or not repay capital is seperate to this and is a matter of personal risk tolerance?
 
I suspect Brendan means the following:

Instead, of paying x euros off an investment property and y euros off a PPR (per month) Kaso should put both x any y towards paying off his PPR as the tax relief on this is far less than the tax relief claimable on his investment property.
 

The reply was good advice-its up the the OP to decide what is best for them. 100% of interest on investment properties is allowable as an expense against rental income, while tax relief is only given on some of the interest on a PPR. Therefore it makes more sense to increase repaymentd on PPR, and place investment property on interest only while increasing the payments on the PPR. There is no risk in doing this so long as you are paying the equivalent amount of capital of the PPR as you would have on the investment property-i.e you increase the repayment on the PPR by at least the amount of the capital that you are no longer paying of capital on the investment property.
 
The ppr is in my wifes name - we did this to pay less stamp duty on the purchase of the property as she was a first time buyer. If she (or we) go to claim mortgage interest relief on the ppr, will the revenue request us to pay the stamp duty we saved when we put the property in her name? As a married couple, could we only claim the mortgage interest relief for another 2 years as I already claimed it for 5 years - in that case it would hardly be worth claiming as the risk we'd be required to pay greater stamp duty would be too large.
 

The good news is that stamp duty is not linked to your status so once you are living in the house there is no claw back of relief. Though if you did something during the purchase to avoid paying the taxes then that is a different matter and you are not going to get the advice you are looking for here-for obvious reasons. Claiming interest relief on two PPR properties, is not correct and if you are doing this I would move to rectify this asap. You can only have one PPR, whether married or not.

Its unclear if the house you live in was bought before you got married. If so how can the house be in her name only? Legally the house is owned jointly under the law to protect the family home from being sold by one spouse-not sure of the correct name.
 
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