In order for Interst Relief to allowed it must be on "qualifying Interest" of a "Qualifying Loan" on a "Qualifying Residency". Tax Legislation is so full of definations its untrue!!!!
A property which is occupied by a Dependant Relative is deemed to be a Qualifying Residency if used as their sole residency. But the main question here is, does the Relative qualify as a Dependant Relative for this purpose as you must be entitled to claim the Dependants Relative Tax Credit.
The following would be the defination for this purpose ...
Where for any year of assessment a claimant proves that he or she maintains at his or her own expense any person, being-
a) relative of the claimant, or of the claimant's spouse, incapacitated by old age or infirmity from maintaining himself or herself, or
(b) the widowed father or widowed mother of the claimant or of the claimant's spouse, whether incapacitated or not
There is a third one but it does not apply for the purpose of Mortgage Interest Relief.
Oh, in relationto the CGT, yes one property occupied by a dependant relative is exempt from CGT as it is deemed for the purpose of CGT as being the owners PPR even though he/she has their own.