I have a client who curently owns the building his shop is in and rents out the upstairs flat.
He wants to remortgage the property and buy half of another property which is currently owned by his bother and rented to his mother. The property is rented out at market rate.
Would the interest on the remortgage be allowable for tax? Does the rental of the new property have to be a partnership with his brother or can it be treated as a sole trader business and does either structure effect the tax treatment of the interest?
As I've only just begun acting for this client I am not sure what value the property was introduced to the business at and it isn't clear from the information received from the previous accountant.
Assuming the property would be revalued by say £50,000. How would this be treated for tax purposes?