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BTL loan interest deduction

Loan to finance BTL deposit, delay in property purchase

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Following an offer from his bank a BTL owner took out a large personal loan, intending to use it to finance a deposit for his next property purchase.  The purchase took place well almost 2 years later, by which time the personal loan was about 50% repaid.  Can the loan interest be relieved against the income from the new BTL or existing BTL profits?

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By Tax Dragon
15th Apr 2019 06:40

Any thoughts of your own to share? I ask because you haven't given much meaningful (or even indicative) information, so you're going to have to tell us more or work it out yourself. (*)

In the old old days, the answer (per HMRC) would have been a flat "no". Then (still per HMRC) it would have been to follow accounting principles and allow the deduction to the extent that the capital account wasn't overdrawn. (**)

Now you have s272A etc on top of that.

But I'm sure I'm not telling you anything you didn't already know.

(Comments added by way of edit:)
(*) Unless the answer has gone back to being a flat no. But if that's what you think then I say again, please set out such thinking when you ask the question.

(**) I am aware that that abbreviation of the rules is not technically precise, but you know what I mean.

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By Tax Dragon
15th Apr 2019 09:05

Having now looked at s272A etc I don’t see the issue – the rules seem to me to work perfectly well alongside HMRC’s views as expressed in the BIM.

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