Property tax relief restrictions on personal remortgage?
Hello Everyone, Can anyone clarify the following.
Is tax relief on mortgage interest for personal remortgage funds available if :
1. Funds are withdrawn for personal use and not reinvested?
2. Remortgage funds are reinvested, but exceed the purchase price of the properties?
The problem of 2. is an established portfolio of long-standing giving large gains in value.
If 1. Is no – then a pension can’t be taken other than from rents?
If 2. Is no – then the investment can’t continue, as without tax relief it would not be viable?
Thank you and regards
ken ward
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Possession Order gained but problems persist!
Member Since November 2015 - Comments: 584
11:52 AM, 24th February 2021, About 5 years ago
My understanding is that anything up to the original purchase price can be remortgaged and the interest on borrowing is tax deductible. Any interest on an amount refinanced above the original purchase price is only tax deductible if it is reinvested or used for business purposes.
Member Since December 2019 - Comments: 241
7:30 AM, 27th February 2021, About 5 years ago
I believe the previous comment is incorrect. Previous to 2015 any fund raised up to the original value of the property at the time it entered the rental market was deductable. The rules changed in 2015, where these funds must be reinvested into the buisness to be eligible.
Of course they are no longer directly deducted, they are entered for a basic rate tax credit of 20%, so higher rate tax payer doesn’t get 40% only 20%