How allowable is interest on a loan taken out after property purchase?
I have a client who has taken out a substantial loan. He rents out property but the loan is not secured on any particular property. There are no other loans.
What are the conditions to “link” the loan to the rented property?
I’m aware of the possibility of withdrawing property capital a/c by way of a loan and getting relief for the interest on the loan up to the value of the capital a/c.
Can any loan be linked and deemed as a loan for the purchase of the property? Given that the loan is taken out several years after the initial purchase, there is no actual flow of funds from the loan to the purchase of the property. It all seems rather nebulous, so I’m struggling to see how one can say “this loan is for the withdrawal of the capital from this rented property”. Or to put it another way, what would prevent a loan being linked?
By the way, the initial purchase was not funded by any loans.
- Sage Priority Support 134 3
- incorrect old p60 236 5
- US company hiring UK citizens in UK 106 2
- Cost of demolition of a shed - revenue or capital? 795 24
- Micro-entity accounts 71 1
- Are you going to Tick and Bash on 21 May? 966 26
- Related party disclosure 128 3
- Inflation and fees 1,287 23
- Company reconstruction 63 1
- Missing tax return 242 3
- Rolled up interest and late interest rules 208 6
- US LLC - anomaly in UK and US treatment 94 3
- Basic Tools and PAYE succession 132 1
- Advice please! 382 2
- VAT on new builds 148 3
- CGT query on investment property sale 114 1
- Summarise excel cashbook by month 342 6
- Are accountants facing a doomsday scenario? 1,933 28
- Redundancy Pay 444 6
- Entertaining - am I missing something or is my client taking the mickey 732 6