Re-mortgage

[mark willis]

Hi

I have seen a property I wish to buy to then let out.

The vendors are looking for a quick sale and I have enough cash to pay for it outright (but this cash is earmarked for other purposes).

My question is if I buy the house for cash, if I then then re-mortgage it for say 60% of the value to get my cash back, can I then offset the interest on the mortgage against the rental income?

thanks

mark

[deltaforce1]

Your taxed on the net rental income, which is gross rental income minus costs, such as interest repayments etc.

[pqtaxation]

My question is if I buy the house for cash, if I then then re-mortgage it for say 60% of the value to get my cash back, can I then offset the interest on the mortgage against the rental income?

Yes.

See HMRC Manual BIM 45700 for explanation of how you are free to withdraw your owner's capital and replacing it by a loan on which interest is wholly and exclusively for financing your rental business and so is deductible from rental income.

http://www.hmrc.gov.uk/manuals/bimmanual/bim45700.htm