release of equity from unsold previous primary residence

[sunrise21]

My wife bought a house in 1999 for £70000. We married in 2002 and in 2004 wanted to buy a new property together. We couldn't get a quick sale on my wife's house so I bought the new property in my own name and we rented out her house. We remortgaged her house to reduce the mortgage on the new house and decided to rent out her old house instead. Now we have been told that we can only offset the interest payments against tax on the original purchase price, not the remortgage. Is this correct? If it is, how can we effectively release the equity in her house and have a rental property which is more maximally mortgaged without selling her house and buying a new rental property? Is joint ownership of both properties an option, or is there a more straightforward way of sorting this out? We would appreciate any advice! Thanks

[King_Maker]

Not necessarily.

It will depend on the value of the property when the rental business commenced. This is the maximum loan on which the interest is allowable against the rental income.

I would be surprised if this is less than the original purchase price.

[CDavey9501@aol.com]

No, it is value at date first let out that is relevant.

[CDavey9501@aol.com]

Sorry. Posted without seeing Kingmaker's reply.

[King_Maker]

I think we posted at ~ the same time.