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Where Taxpayers and Advisers Meet

Mortgage Interest

foxes@ourden.free-on
Posts:1
Joined:Wed Aug 06, 2008 3:10 pm

Postby foxes@ourden.free-on » Sun Apr 25, 2004 12:34 pm

I purchased a property which is rented with no mortgage. I am returning to the UK to live and want to purchase a property to live in as my main residence. Can I take a BTL mortgage on my rented property (to partly fund the new property)and claim the interest against rental profit?
Thanks for any advice

funcrusherbill
Posts:106
Joined:Wed Aug 06, 2008 3:10 pm

Postby funcrusherbill » Sun Apr 25, 2004 12:49 pm

Unless the law has changed recently the answer is no, unless your let property is owned by a company or you use the loan for improvements (not repairs) on the rented property. Depending on where you live now, it is possible you could sell your UK property without CGT befor returning to the Uk, and then re-invest in another with a mortgage, or even sell the existing to your wife / company, who could raise a mortgage. I know little about foreign residence, but I hear Belgium is useful. i think there may also be some reliefs for ex-pats who let their former home whilst overseas.

accountant@uktaxshop
Posts:550
Joined:Wed Aug 06, 2008 3:04 pm

Postby accountant@uktaxshop » Mon Apr 26, 2004 1:06 pm

You can offset mortgage interest equivalent to the value of the property when it first entered into your lettings business.

Eg if it was £100k when you started to let, and worth £200k now, you can offset a loan equivalent to the £100k.

I suggest Bill you take a look at BIM45700 example 2 before trying to give advice on this topic.

There is some scope for selling the property to remove the CGT applicable prior to your re-entry if you are currently outside the scope of UK CGT, however you need to make sure you are outside the scope and you donÂ’t get hammered in your current country.

If you need some help planning your return to the UK, this is something I deal with on a regular basis. A little formal planning can often have quite a considerable impact.

Regards,

James Smith
Chartered Accountant
www.jamesesmith.co.uk
01284 764436


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