Interest relief on residential equity release part of mortgage to fund BTL

[maria100luisa]

Hello

I remortgaged my residential home and released equity to put towards the deposit on a BTL property at the end of 2014. This fell through and it wasn't until the end of January 2016 I purchased a different BTL flat.

I have been paying additional interest on the extra money released on my residential mortgage. I thought I would be able to claim tax relief on this, at least from the point at which the BTL sale went through, but a HMRC advisor told me today this was not the case as 'everyone would be doing it'.

I have seen different advice from accountants online on this and I'm not sure why I shouldn't be able to claim tax relief as the extra mortgage taken out was for the BTL and nothing else.
This is however my time doing a self assessment tax return.

Please can someone with knowledge clarify? Many thanks

[Crossleys]

I'm afraid I find your question a little confusing.

Are you saying, I borrowed some money at the end of 2014, I used the money to buy a BTL in January 2016, and I want to know if I can offset the interest paid on the loan (paid after purchase of the BTL) against the rental income from the BTL? If this is the question then the answer is yes.

Note that when taking out a loan to buy a BTL it is irrelevant what the loan is secured on; the relevant issue is what the money is used for.

Regarding advice from the HMRC "advisor", I would make two comments, firstly it depends on the exact question asked, and secondly so-called HRMC "advisors" often have shockingly little training and consequently talk complete nonsense.

[maria100luisa]

thanks for your reply - sorry if it isn't clear, it seems like you have understood what I meant.

Just to clarify, in addition to the BTL mortgage I took out to fund a property purchase, I also remortgaged my main residence and took out out a bigger mortgage on it at the end of 2014. The extra loan money was used for a deposit on a BTL property purchased in Jan 2016. (The money was originally intended for a property purchase around the time it was freed up late 2014 but it fell through)

I'm filling out my self assessment tax return and wanted to clarify if I could put the interest paid on the additional mortgage loan that was taken out on my residential property in order to fund the deposit for the BTL, as an expense, and in addition to the BTL mortgage interest.

From what I have read I could only offset the interest paid on the loan from when I purchased the BTL property and not from when the loan was taken out in 2014.