Remortgage a rental property

Remortgage a rental property

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If you re mortgage a rental property, and use the advance as a deposit on another house, can you offset the whole interest against the original rental properties income? Even though the remortgage was for a deposit on another house.

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By MikeCahill1965
14th Dec 2011 22:32

Depends....

Providing the new house is a rental property as well then yes, though I would perhaps apportion the interest charge between the two.

If the original house did not have a mortgage (or you are increasing the existing loan) and you buy a house that isnt a rental property, then the 'new' interest cant be set against the original income.

 

 

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By chatman
15th Dec 2011 00:10

I agree with MikeCahill1965. If it is a loan to buy a rental property then the interest can be set off against the rental income.

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By ACDWebb
15th Dec 2011 07:57

Depends what loan you have against the rental property

and the value of the property when it was first let.

If you have a property valued when first let ay £200k against which there is already a loan of £50k and you draw £50k as the deposit on another property, be it let or not, then the interest on the new £50k will be allowable.

You have drawn down free capital from the capital account of the property business and replaced that with a loan.

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