Hello,
Interest on mortages for rented property is only allowable on the initial value, either by purchase price or the value when a former home is let.
I have a property that has been let for a long time which used to be my own home. Using the above rule I can only claim interest against rent on about 37% of its cuurent market value.
I have calculated that if I sold it under the current tax rules I would have to pay about £1000 cgt, or less if capital improvements are taken into account.
My question is this, is it possible to 'bed and breakfast' property as people used to do with shares?
If I sell the house to someone I trust, pay the cgt and have the transaction registered with the land registry and then buy it back again, would I then be able, from a tax point of view, to borrow up to 100% of its new purchase value?
Assuming that credit is available again, when I do this I would then have as much as £80k spare to offset against the mortage on my own house.
Any thoughts?
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