Blogger
Share this content
0
3
746

Deductibility of interest on loan payments to buy premises with business/private usage.

A sole trader wishes to buy a pub which will also be his main residence upstairs. He is unable to finance the loan himself but instead his father takes out a loan himself to buy the premises and becomes a small profit sharing partner within the business. Each month the son then transfers sufficient funds into his father's account to support the total loan payment being made to the lender.

The question is whether the son can claim tax relief on the interest part of the loan repayment against his profits?-can we apportion based on business/private usage? (Incidentally, the property title deeds will be in the son's name)

Thanks for any help.

Replies

Please login or register to join the discussion.

avatar
11th Nov 2010 13:40

Well is it a partnership or not?

Is the father securing the loan externally or do you reallly mean he is acting as guarantor?

 

 

Thanks (0)
avatar
By cde123
11th Nov 2010 14:17

Securing externally

The father is obtaining the loan externally in his own name and his son is actually making the payments on it. As far as the business running is concerned, day to day is carried out by the son only.

Thanks (0)
avatar
By blok
12th Nov 2010 08:18

.
Mmm...
Would you not be better having a loan agreement in place between father and son. Keep father away from partnership altogether.

Thanks (0)