Hi,
I have an enquiry with regards to B2L rental income and interest paid on the loan.
1) It has come to my attention that the Inland Revenue officers would feel comfortable with claims of loan interest against rental income tax on a B2L for a loan as much as the value the B2L was purchased (not its current market value). Is this something that people could verify out of their experience or professional expertise?
2) Let's assume the case of a B2L property purchased at 100K, with 10K deposit and 90K borrowed by re-mortgaging the investor's main residence. The interest on the 90K would be tax-exempted. If point 1 above is true, then interest of another 10K borrowed could be claimed against the B2L rental income for tax purposes, until we reach the 100K original purchase value of the B2L. Imagine now that 2 years after the B2L purchase, the investor releases another 20K on their main residence. Here pops the question: could interest on 10K out of this additional 20K loan be also tax-allowed against teh B2L rental income?
Any poinetrs much appreciated.
Aris
I have a B2L purchased using 10% deposit and 90% borrowed capital I sourced by remortgaging my main residence. As the loan was used to buy the B2L, rental income used to pay mortgage interest is tax-allowed. It has been coming to my attention that Inland Revenue are comfortable