One of my clients is an unincorporated partnership who operate a two house rental business. The rentals are to private tenants.
The partnership is considering incorporation in the next year as the proprietors want to move into the commercial lettings arena but also still retain the private lettings business.
I have been giving advice on the pro's and cons of incorporating and looking at the tax implications etc etc however, the partnership have approached their mortgage lender and the lender has refused to transfer the mortgage to an LLC /LLP unless the partnership changes the existing rental properties to commercial property or increase the lending.
If the partnership was to incorporate, would the LLC/LLP still be able to obtain tax relief on the 'personal' mortgage interest (the partners remortgaged especially to take on the buy to let properties) ?
My thinking is not but I would appreciate any advice from Accounting Web users.
Has anyone had any clients in this position? How did they circumnavigate the mortgage problem? Any LLC/LLP friendly mortgage providers out there?
Any help much appreciated.