polo1 said:Also can someone tell me if the mortgage is higher than the income from rent on 2nd property do you still have to pay tax on this or can you write it off? I am not sure about this and tried to find info on the revenue site but to no avail..
thanks,
davidoco said:As pointed out by xeresod it would be in your interest (no pun intended) to have the bank now call it a "buy to let" mortgage for the reason that you can offset the interest paid against income. There shouldn't be any legal costs involved.
What I would do if I was in your situation and if I was a 42% tax payer, I would remortgage the existing house for a repayment amount that would maximise the tax relief available in offsetting the income from the rent against the interest paid.
For example (rough figures no allowance for expenses on rental property)
Existing mortgage A 100,000
new house mortgage B 150,000
So Remortage A for 200,000. Rent it out for 800 pm. Approx interest payable per month 550, so income tax payable at 42% of 250. You then only need a new mortgage of 50,000.
What you need to remember is that interest paid on a rental property gets tax relief at 42% because you avoid paying the tax on the income and interest paid on PPR only gets tax relief of 20%.
If you post some figures of existing mortgage amount, new mortgage amount and how much you would hope to rent out existing house for I can do the figures for you.
cloughy said:the amount of the mortgage is restricted to your current mortgage, so can't remortgage to the max and claim a higher interest deduction.
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