Client bought a property with an interest-only mortgage that he lets to a family member at less than the market rate.
I have told him that we will have to restrict tax relief on expenses (which exceed income) so that there is nil profit/nil loss.
When I put the figures on the Return I am thinking I will need to leave in charge a net profit equal to 25% of mortgage interest which we claim as a personal relief at basic rate rather than as a property expense. Or should I ignore the interest question and just show total expenses as equal to income?
Any thoughts appreciated.