Property Rental Income - loan interest

[maths]

Section44, do you accept my statement above, namely:

Refinancing of the property would extend to substituting interest bearing debt for capital introduced initially to effect the purchase; the maximum capital to be so refinanced being the market value of the property when first let.

How the borrowed funds are then applied is irrelevant.

[section 44]

I'll be honest. Technically I can stand by my comments but the problem was that I didn't read the initial post and picked up on this:

Use of the loan proceeds is not relevant.

and assumed (having not read the initial post) that this comment was being made in a different context (e.g. where people ask if they can they deduct interest on a their home buyer mortgage against their buy-to-let and some response support this, quoting the bit in the business income manual as support).

So my comments are correct but clearly out of context.

[maths]

I'll be honest

As they say, does this mean you are not normally??

[King_Maker]

To reiterate (in a property rental business context), my interpretation of the law is as follows: if the interest on a loan is to be deductible, then it is vital that the proceeds of the loan are used to acquire, or refinance, the acquisition of a let property.

King-Maker, it's probably easier to look at this another way. Why don't you provide some examples of an alternative use for the proceeds of the loan (i.e. other than to acquire, or refinance, the let property) and then explain how, by reference to those examples, the interest payments would satisfy the "wholly and exclusively" test (so as to be deductible in calculating rental profits).

section 44,

I note that you are not stating HMRC's view to be wrong. So I assume it's my wording? Obviously, the loan proceeds have to be lent to the business - it is this that enables the relevant amount of capital to be withdrawn (to be used as one wishes).