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Where Taxpayers and Advisers Meet

tax relief on BTL borrowing.

someone
Posts:691
Joined:Mon Feb 13, 2017 10:09 am
tax relief on BTL borrowing.

Postby someone » Mon Feb 04, 2019 4:52 pm

Is there any way to gain tax relief on borrowing not secured on a BTL property?

Scenario: Main home, value 300k mortgage 200k. BTL value 300k borrowing 100k.

The BTL used to be the main home, has 3years of a 5year fixed to run and the capital is being paid down rapidly.

The fixed rate on the main home is about to end so needs remortgaging. The term has to be much longer as the BTL repayments are steep.

What I wanted to do was borrow a further advance on the BTL of 100k interest only, use that to reduce the mortgage on the main home and then remortgage the remaining, reducing the term so that the overall payments remain roughly unchanged.

But that has failed because our lender will not lend money to pay down another mortgage (ironically, were we to spend it we'd be ok but paying down another mortgage from the same lender is 'not responsible lending')

The tax relief advantage of doing the above would be about 400 per year, not huge but enough to be worth the effort of asking the question here:

Is there any way (that's going to survive an HMRC investigation) to achieve the same accounting without needing to secure additional borrowing on the BTL and that isn't going to cost thousands to implement?

(The value of the BTL at the time the letting business started is enough to get tax relief on the entire borrowing but nobody is going to lend 100% LTV on a BTL in a falling market!)

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