Buy to let

[Exigeowner]

I have a buy to let property mortgage free and have my own house with a mortgage, would I be right in thinking that I should swap that over, will the repayments on the buy to let come off my bottomline make on it and therefore reduce my tax on the profits ? or is it not as straight forward as that ?

[B17NNS]

The interest (not capital) on the loan of the renter is deductable yes.

Ideally you want an interest repayment on the rental property mortgage to be there or thereabouts that of the rental income. ie no profit and no tax to pay.

Use the equity out of the renter to reduce your home mortgage.

[anonymous-user]

IIRC you don't need to do anyhing at all. You can offset the income against interest for borrowing up to the value of the property at the time it was purchased.

However, you need to ensure this borrowing is not tainted and would be best to speak to your accountant.

[Eric Mc]

Tax relief is available against rental income on loans which are taken out for the purchase of the buy to let property. If the buy to let is fully paid for, how can you offset any loan interest against the rentakl income when there is no loan on the rented property?

What do you mean by "swopping over" the loan? Do you mean that you would have the loan for your home allocated to the rental property?
Would a bank be agreeable to this?

[Exigeowner]

I was thinking that it would be a case to re mortgage the buy to let property for as much value as possible and using those funds to pay off my home I live in that has the mortgage.

So im then left with a buy to let that has a mortgage and needs monthly repayments that the interest can then be offset against rent and a house I live in that is then mortgage free saving me the interest payments.

[Eric Mc]

Tax relief is obtained based on the PURPOSE of the loan, not on the basis of the asset which is secured on the loan.

If the PURPOSE of the loan is to pay for your home, there is no tax relief available on the interest on that loan.

If the PURPOSE of the loan is to buy a property which is rented out, the interest on that loan CAN be offset against the rental income.

It's all about PURPOSE, not secured assets.

[Laner]

Check the figures first as most B2L mortgages have large set up costs 2.5% or £2500.00 are not uncommon on a 2 year fix! If anyone knows different PM me as i am looking to remortage a B2L.