Tax and loan to partner

by **gunner** on Thu Jan 26, 2012 10:58 am

My partner has recently inherited a house which had £30k of debt associated with it. Since she is not working and is looking after our baby, I have raised £30k on her behalf by remortgaging my own house. I have also used my savings to pay her legal fees. When the probate is finalised the £30k debt will be paid off and the property will be transferred into her name and potentially my name as well as a small percentage to show that I have an interest.

I was wondering if it is possible to claim some kind of tax relief on this money which can be offset against my income?

We are not married and I am in full time employment, paying tax at the higher rate. I also have a BTL property which I have used to offset my resedential mortgage.

Any info on how I could reduce my tax burden would be appreciated.

by **Peter D** on Thu Jan 26, 2012 11:40 am

Please explain the "£30k of debt associated with it" surely the estate should have cleared the dept. I see no tax relief form your laon to your partner.
Please explain this "I also have a BTL property which I have used to offset my residential mortgage." In general you can claim interest on a mortgage raised on a B2L but not a mortgage raised to by your home. Regards Peter

by **gunner** on Thu Jan 26, 2012 11:55 am

The inherited property was from her estranged husband who died intestate, legally she was still the wife and entitled to the estate although they had been apart for many years. There was a legal battle with his parents who had wrongfully obtained probate. As part of the settlement, she agreed to repay £30k to his parents as they had loaned their son the money to buy the house. When the payment is made and varyious other legal issues cleared up, she will own the house outright with no mortgage.

When I bought my BTL property, I moved a large proportion of my residential mortgage to the BTL property thereby ofsetting the tax liability on the rental income against the BTL mortgage.

I was trying to see if there was anyway I could claim tax relief on the £30k I raised on my residential mortgage to help my partner.

I understand that certain types of qualifying loans are recognised so wondered if this one is.