So! Client lets property to son at below market rent. Expenses are therefore restricted such that they cannot exceed income. All good.
Except I now find myself wondering how this interacts with the 'new' interest rules. Say she gets rent of £10,000 and pays interest (no other expenses) of £10,000 in 17/18. Does she get the £7,500 deduction from rent, plus 20% of the £2,500 as a tax reducer? That seems safe, however what if the figures are instead £9,000 rent and £12,000 interest - does she get the £9,000 deduction (as this isn't creating a loss) AND still get the tax reducer? Or does she only get £6,750 as a deduction and then 20% of £2,250 as a tax reducer?
I hope you see what I'm getting at (and I hope I'm not being [too] daft!).