Tax relief on mortgage interest for previously unemcumbered property?Make Text Bigger
I have a property which once upon a time had a mortgage on it and the property was let. I used to claim the mortgage interest as an allowable expense each year and everything was hunky dory.
Then it came to pass that I paid off the mortgage and could no longer claim any interest against tax. Later on I took a loan of 150K for 50% of its value (300K) on the property. The original purchase loan was 60K My understanding at that time was that only the original purchase loan interest could be used as an expense. Then the seed of doubt was sown in my mind as I noticed an article on this website that indicated that interest on a new loan could be offset against Tax. Is that in fact correct??
If so, does it matter what was done with the loan? About 70K was used as a deposit for another BTL property and the rest was used for non BTL purposes. My inkling is that only the 60K used for the BTL will be tax deductible.
Would welcome any learned views
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