Tax implications of remortgaged loan used for BTL purchase?

by Readers Question

13:46 PM, 3rd February 2020
About 9 months ago

Tax implications of remortgaged loan used for BTL purchase?

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Tax implications of remortgaged loan used for BTL purchase?

15 years ago, I purchased a BTL property for £300k and financed this with £130K re-mortgage against my home and a £170k BTL 20 year interest only mortgage, (my home mortgage is also an interest only).

For the past 15 years I have been claiming tax relief on both mortgages, to offset my costs (subject to the new interest rate changers introduced in 2017).
I have now moved and my new mortgage, with a new provider is now reduced to £100k and is also interest only.

My question is whether I can still offset my reduced home mortgage costs against my BTL flat as before, my understanding is that I can, as the £130k loan I took out is still implicit in my new mortgage although reduced by £30k.

Many thanks

John


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Comments

Neil Patterson

15:59 PM, 3rd February 2020
About 9 months ago

I would always double check with my accountant and or HMRC that they are still happy, but I would think this is still ok dependent on circumstances.

Don't forget though you may not be able to offset all the interest in the post section24 world.

Mark Alexander

8:55 AM, 4th February 2020
About 9 months ago

Reply to the comment left by Neil Patterson at 03/02/2020 - 15:59
I concur with your thoughts on this Neil

Laura Delow

10:38 AM, 4th February 2020
About 9 months ago

I concur with Mark & Neil. If an owner-occupier mortgage is used solely for the purpose of paying down the debt on a buy-to-let or to buy a new one, the landlord should still be able to offset the interest costs against their rental income - to the extent that that relief persists.
The key points as I understand it are:-
- the purpose of the loan is the important factor rather than what it is secured on.
- if challenged you would need to show a clear paper trail demonstrating that the money released from your home had been used to pay down a buy-to-let loan or buy a buy to let property
- you should then be able to claim the new 20pc tax credit on the interest on your mortgage even if it is taken out against your main home.

Mick Roberts

11:07 AM, 4th February 2020
About 9 months ago

It used to be the case where if u took money out your own house & used it solely for buy to let rented property, then HMRC would allow the interest relief. If rules han't changed (As u never ruddy know with this Govt), then I also concur (the posh inside me) with Mark & Neil & Laura.

Anyone else listening, look into flexible current account offset mortgages (what ever they called nowadays) on your own house, if u gonna' be doing this often, money on tap for when that quick illusive bargain comes up. As long as u disciplined to pay straight off when you've re-mortgaged your Buy to Let (at 2%) as these offset mortgages tended to not be cheap rates. £1000 for that advice please.


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