Question:
I have purchased several buy-to-let properties using my own home as security. Some of the buy–to-let properties are registered and income declared in my own name, and others I have put into a limited company. Am I entitled to claim interest relief on my borrowings?
Arthur Weller replies:
Yes you are. See www.hmrc.gov.uk/manuals/pimmanual/PIM2105.htm that states interest is an allowable expense. And note (see www.hmrc.gov.uk/manuals/bimmanual/BIM45685.htm) that this applies also when you use your own home as security. However, you must make sure that the loans for the properties owned by the company are company loans, and not personal loans, because if they are personal loans the interest is not allowable. There is a way round this problem, but perhaps you would need to speak to a tax adviser about 'qualifying loan interest' - see www.hmrc.gov.uk/worksheets/sa101-notes.pdf at page AiN20.
