Remortgaged PPR to buy second home. Tax Relief?

[extopia]

Can anyone give me the definitive answer on this? We had paid off the mortgage early on our PPR then later bought another house (which is lived in by a relative who does not pay rent). The new mortgage was on our principle residence rather than on the new property.

Are we entitled to claim tax relief on this mortgage interest?

 

[ClubMan]

Interest on a loan used to purchase or renovate an investment property can be offset against rental income regardless of what property the loan is secured on. For example a loan secured on a PPR but used to purchase/renovate an investment property. However in your case if you are not receiving any rental income form the investment property then you have nothing against which to set the mortgage interest and other allowable expenses.

 

[stuart]

On the property you have "rented" to family member you are in fact making a loss on the property

Unfortunatly, rental losses are restricted to be utilised against rental profits

Therefore the losses although accumulating cannot be offset against any other income in the current year
In general losses can be set against profits on other (Irish) propertirs or carried forward and used against future rental income

But in your case as it is a rental at no cost, by choice, the losses on that property cannot be set against any profits from others properties (if you had some or if you purchased some) but have to be set against future profits on that property only

Hope that helps make things clear as mud

[email protected]

 

[delgirl]

I understand that if a property is occupied by a dependent relative, rent free, that any gains you may eventually realise on the sale of this investment property, may be exempt from CGT for this period.

I'm not sure how you would document this - perhaps Stuart or ClubMan knows?

 

[ClubMan]

I know what you're talking about but I've never understood the ins and outs of that particular issue. Sorry.

 

[delgirl]

Where's HamSlicer when you need him, eh?

 

[Kitty Kat]

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.

 

[extopia]

Interesting, thanks!