Question:
I am looking at releasing funds from my current mortgaged property. My current home is valued at £220,000 and we owe £80,000. We are looking at releasing £60,000 to purchase a terraced house to rent out. The rental property will not have any additions loans against it. Can we offset the interest on our current property against the tax?
Arthur Weller replies:
If you look at www.hmrc.gov.uk/manuals/bimmanual/BIM45685.htm you can see that as long as the borrowed funds are used for your property business, the interest you pay your lender will be an allowable business expense to offset against your rental income. This is the case even though the security for the loan is your own home.
