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Re-mortgage on BTL properties

Has the matter been cleared up following HMRC's 2017 updates?

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Hi all,

As you're probably aware HMRC decided to muddy the waters in 2017 re: interest relief on remortaging BTL properties up to their value when they were introduced into the property business see https://www.accountingweb.co.uk/tax/hmrc-policy/hmrc-altered-guidance-to...

Doe anyone know whether there have been any cases or clarifications on this matter? I am still of the mind that the interest is allowable but would be interested to know whether this opinion is no longer correct, at least from HMRC's point of view.

Thanks in advance

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By lesley.barnes
05th Aug 2021 15:55

What is the increased borrowing for?

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Replying to lesley.barnes:
By Paul D Utherone
05th Aug 2021 16:03

lesley.barnes wrote:

What is the increased borrowing for?

I presume the OP's point is "Does it matter?" based on BIM45700 Ex2 - https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45700
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Replying to Paul D Utherone:
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By Liam.em
05th Aug 2021 16:08

Yes this is the general point.

HMRC have made a perfectly clear area of the tax system very murky indeed.

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By Duggimon
05th Aug 2021 16:40

As far as I'm concerned the position remains unchanged and borrowing used to finance properties whether by purchase of new properties or reimbursement of the owner's capital account is allowable.

So far as I can tell there's been no legislative backing for HMRC's position and no tribunal cases to set a precedent in support of the view put forth in the linked article, though I'm happy to stand corrected if I've missed it.

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Replying to Duggimon:
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By Liam.em
05th Aug 2021 16:59

Thank you.

I am of the same mind but just wondered if there had been any clarification.

I had forgotten about the changes until a client query jogged something in my brain.

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By Paul Crowley
05th Aug 2021 18:22

If enquiry starts, HMRC officer will probably need to be educated.
Their start position is always that all loans must be part of a purchase of property or like for like refinance

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