Take out mortgage on rental property

Hi azerty

Your mistake is quite common.

The rule is simple enough: You are allowed to set interest on a loan taken out to buy or to improve a rental property.

It is the purpose of the loan which decides whether the interest is allowable or not.

So if you remortgage a rental property to buy a family home, the interest is not allowed.

However, if you remortgage your family home to buy a rental property, then the interest would be allowed.

Brendan
 
Brendan Burgess said:
However, if you remortgage your family home to buy a rental property, then the interest would be allowed.
Click to expand...
While true, that's not really an option anymore though is it?

No mainstream bank will remortgage a PPR to allow you to purchase a rental. And those that had been doing it (like ICS) have very high rates now so you would be incurring a huge cost to claim an interest expense
 
Would that mean that if I planned to buy another rental property I could get the mortgage on the existing rental property I have and then use the funds to purchase another, therefore eligible for the interest relief on that mortgage once it was rented out?
 
Yes, if you remortgage a mortgage-free property to buy an investment, the interest would be an allowable deduction.

But as OKGo has pointed out, you will probably not get such a mortgage.

Brendan
 
Brendan Burgess said:
Yes, if you remortgage a mortgage-free property to buy an investment, the interest would be an allowable deduction.

But as OKGo has pointed out, you will probably not get such a mortgage.

Brendan
Click to expand...
So no bank would effectively do this? Even if Im currently mortgage free on PPR as well?
 
You must log in or register to reply here.
Menu
Log in
Register