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Sam
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I have a flat which I rent and pay tax on. I am living in

Resolved Question:

I have a flat which I rent and pay tax on. I am living in my partners flat and she wants to remortgage it and pay off the other flat. We now realise that we will have no mortgage for the rented flat and will have to pay full income tax on all the rental.
My friend says that I should be able to claim tax relief on part of the remortgage, as it is being used to pay off the rental flat mortgage. We haven't signed off the remortgage yet as we want to know the tax implications.
I would be grateful of some advice.
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.

Hi

Thanks for your question - I am Sam and I am one of the UK tax experts here on just Answer.

Yes thats right but only the interest element of the repayment and the % that relates to the having paid off the rental property.

However as the reted flat is in your name only and this remortgage will I assume be in joint names you can only claim 50% share of the relevent interest - if it remins in just her name then you can claim nothing.

I would usually recommend then putting the rented property in joint names, so you can claim 100% of the percetage of interest that relates to the paying off the mortage on the rented property, but if you do this whilst you are not living there (which you are not) then you will lose half of all the tax reliefs (such as private residence releif and private lettings releif, for when this has been your main residence) and t6his could prove to be very costly in the future if and when you come to sell.

Let me know if I can be of any further assistance as this is just a general response of the position.

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 13780
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Customer: replied 2 years ago.

The other flat is in both our names too.

Expert:  Sam replied 2 years ago.

Hi Roy

Then you can have the inter4est that relates to the % paid off (so if you borrowed an extra £100,000 to pay off the rented property - and then have a loan on £200,000 then you could laim 50% of the loan interest element each year (and 25% ech against your own half share of the rental income)

I hope you took advise at the time of the property being put in joint names, so you minimisd the loss of tax reliefs.

Let me know if you need any further assistance

Sam

Customer: replied 2 years ago.

Thanks for your help. Could you clarify the second element? I understand the 50% of the loan interest tax relief, but you also mention 25% of each on the rental income. I am not sure what you mean there.

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