re-mortgage tx deductible?

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zxcvbnm

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In teh past i remortgaged to pay for the deposit to buy another property which was also mortgaged.

I know the mortgage interest for the 2nd property is tax deductible.

Can the remortgage interest for the first property property used to fund the deposit for the 2nd property also be claimed as an expense?
 
I am sorry, but I am lost by your question.

Interest is allowed on a mortgage which is used to purchase an investment property. It it the purpose of the lending which determines whether you can claim interest relief or not.
 
to clarify - i owned 1 property.
I then remortgaged this property to use as part payment of a 2nd property (the rest of the payment for the 2nd property was funded by a mortgage)

So - can the interest on the remortgage be offset against tax also given that it was used to part fund the purchase of the 2nd property ?
 
If the second property is an investment property then yes you can deduct the mortgage interest paid on the remortgaging of the first property from tax due on the income from the properties.
 
Ok - thanks for the reply.

WHile the reply suits my tax bill I am surprised. I assumed otherwise.

Sorry to labour the point but just to clarify it once more with teh figures below for illustration.

I have 2 investment properties.

Lets say property 1 was bought for 300k with a mortgage of 200k.
Obviously I can offset the interest on the 200k against the income for property 1.

Property 1 rises in value to 400k - I remortgage for 100k.

I then use this 100k to buy a property worth,say, 350k.
I fund the remaining 250k for property 2 with a mortgage on that property.

So what you are saying is i can offset against tax the interest on the 100k (from the remortgage of property 1) as well as the 250k (from the mortgage on property 2).

So in effect - I can offset the interest on the entire 350k (100k + 250k) borrowed used to buy property 2 yes ?

I would have thought that for property 2 I could only offset the interest on the mortgage on that property 2 (i.e. the 250k) against tax - and not teh additional remortgaged 100k also.

i.e. only mortgages as opposed to remortgages also can be used to affset against tax - even when teh remortgage is used to part fund another property.
 
zxcvbnm said:
So in effect - I can offset the interest on the entire 350k (100k + 250k) borrowed used to buy property 2 yes ?
Click to expand...
Yes.

zxcvbnm said:
I would have thought that for property 2 I could only offset the interest on the mortgage on that property 2 (i.e. the 250k) against tax - and not teh additional remortgaged 100k also.
Click to expand...
Why would you think that? You can offset all interest paid on all investment properties that you own (at the appropriate rate, 75% at present) against all income from all investment properties that you own. It's irrelevant upon what property the loan was secured on, it could even have been your own (non-investment) home! What's at issue is what you SPENT the money on. You could not, for example, remortgage an investment property to buy a speed boat and then offset the extra interest paid against rental income, you can only offset interest paid FOR THE PURCHASE OR IMPROVEMENT of an investment property.

HTH. :)
 
Also, you should ensure that you are compliant with the PRTB requirements for an interest deduction.
 
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