Re mortgage of 1st house to buy 2nd???

[Daithi Thorn]

Hi,

Thinking of buying a second house with my partner, I'm a current home owner and she's a first time buyer.

Looking into Tax relief for the mortgage, would it be better to take out a full mortgage on the 2nd house or to re-mortgage the first house and then take a second smaller mortgage out on the new (2nd) house?

What are the Tax relief implications for
(i) getting one new mortgage for the two of us just for the second house
(ii) for me to remortgage the 1st house and then get a smaller mortgage in her name for the 2nd house?

/Daithi

 

[ClubMan]

Will either property be an investment property and, if so, which?

 

[redbhoy]

Hi,

Thinking of buying a second house with my partner, I'm a current home owner and she's a first time buyer.

Looking into Tax relief for the mortgage, would it be better to take out a full mortgage on the 2nd house or to re-mortgage the first house and then take a second smaller mortgage out on the new (2nd) house?

What are the Tax relief implications for
(i) getting one new mortgage for the two of us just for the second house
(ii) for me to remortgage the 1st house and then get a smaller mortgage in her name for the 2nd house?

/Daithi

(i) I think you get hit for stamp duty as you aren't a first time buyer.
(ii) By remortgaging your first the payments on that may go up negating the effect of a smaller mortgage on the 2nd.
You could remortgage first house and 'gift' your partner the money towards her house. (if she qualifies alone)
I'd think the 'gift' through if i was you in case of future "compliments".

Are you going to keep one for yourselves and rent the other out? I hope you're going to declare it?
Theres tax implications in investment property here that Im not sure of.

 

[Daithi Thorn]

Hi,

Due to work, I'll be living in the currently owned house, with a room rented, and my partner will be living in the new new with a room rented too.

I know, that we won't get hit for stamp duty on the new house as we can just put her name down on the house while we both are down on the mortgage.

My question is though -

If you have two houses then do you have to nominate one of them as the house you receive tax relief on your mortgage?

So if we both have the second mortgage, do I only get tax relief on one of my properties?

Therefore would it be better to re mortgage the first property to still get the tax relief on that property and let my partner get a smaller mortgage so she can get full tax relief on it?

Thanks, hope the above is clear!!!

/Daithi

 

[ClubMan]

I know, that we won't get hit for stamp duty on the new house as we can just put her name down on the house while we both are down on the mortgage.

Even if only her name is on the documentation if you are actually making contributions towards the mortgage then there could be tax/SD implications. See the Revenue press releases [broken link removed] and [broken link removed].

If you have two houses then do you have to nominate one of them as the house you receive tax relief on your mortgage?

Only one can be your PPR but you don't nominate it - it is simply the property in which you normally reside.

So if we both have the second mortgage, do I only get tax relief on one of my properties?

Owner occupier mortgage interest tax relief at source applies to the mortgage on one's PPR. Any other property owned by the individual is an investment property and mortgage interest tax relief does not apply but interest can be offset against rental income.

I'm still a bit confused though. Do you have a beneficial interest in the second property? Is the first property your PPR, the second property your partner's PPR and also an investment property as far as your interest is concerned?

If I was you I'd seek independent, professional advice on the tax and other matters involved.