3 individuals go into partnership to acquire investment properties, 2 of them borrowing to finance their capital contributions. Does the interest on the loans qualify for interest relief? I read somehwere that the funds need to be used for the partnership trade, profession or vocation - none of which this partnership would seem to have
Penny Eaton
Replies (2)
Please login or register to join the discussion.
Thank you, Steve
I understand that, until I get to point 4. Are you saying that interest would be relieveable if a partnership WERE to be established, or only if incurred in respect of joint ownership?
Not a partnership
1. This should be set up as three joint owners not a partnership. Tenants-in-common would be a good idea to adjust percentage ownership pro rata investment input.
Jointly owning BTL is not a trade and a partnership complicates issues such as death/leaving of a partner.
2. Income shifting legislation (proposed) covers partnerships and companies. BTL joint owners are exempt should the rules become law
3. The paperwork is simplified - no partnership accounts and tax returns.
4. Yes the interest can be reclaimed providing it meets the wholly and exclusively and not a capital cost rules.