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Loan interest relief where loan rolled over

We have a client who extended his mortgage by £75,000 in order to purchase shares in a close company.  We have been apportioning the mortgage interest and claiming tax relief on the eligible (£75,000) part.  He has now sold his property and purchased a larger property with a new and  bigger mortgage.  Is it possible to continue to claim interest relief on the grounds that he has "rolled over" that eligible part of the loan or has he effectively repaid the £75,000 loan for the shares?

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17th Dec 2012 14:17

Replacement loans

The rules governing interest as a charge permit a loan to replace an allowable loan, as long as loan no 1 is allowable then loan no 2 that replaces it will be allowable to the same extent.  Make it clear in the white box section of the return that you are claiming that loan no 2 replaces loan no 1 to the extent that it is an allowable loan.

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