Loan interest on let property | AccountingWEB

Loan interest on let property

Client extended mortgage on own residence to raise a deposit on their first let property.  A buy to let loan was used for the remaining capital.

Mortgage interest has been claimed on the amount of interest paid on the additional borrowings on their own home that was used for the deposit.  HMRC say the deposit mortgage loan on their own property which is not let is not allowable. 

The additional borrowings were used wholly and exclusively for the purchase of the let property so shouldn't this be allowable?.  The loan interest has been apportioned so nothing has been claimed in respect of the purchase of their main residence.

HMRC is also disallowing the buy to let fees as these are included in the buy to let loan and have been "capitalised and therefore included in the loan relief claimed". The loan relief claimed is only for the interest paid on the loan .  I believed incidental costs of arranging business finance is allowed so the cost of these as well as the loan interest should be allowed.

Client has dealt with this themselves up till now so not sure if HMRC's decision is based on how client has put it to them.

Before I reply to HMRC I would like to be sure that the mortgage interest on the deposit is allowable and that the cost of the buy to let mortgage fees can also be claimed.  Does anyone agree?






There are 4 comments. Login or register to view them.

I would suggest that HMRC are wrong on the first point


This should be fairly

tladirect |

being too clever

david5541 |

Revenue guidance of cost of finance

valentino rossi |
valentino rossi's picture