Remortgaging PPR to fund new PPR and investment property

D

Dowee

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Can anyone advice if the following is viable/legal

If you have a PPR with a low LTV (20% approx) and you wish to move to a new home and rent out your current PPR. Can you:
- remortgage your current PPR so that the LTV is now say 80% and use the funds to assist with the purchase of the new PPR (in addition to a new mortgage on the new property)
- and then also when you are doing your tax return for what will be your investment property (and which used to be your PPR) write off the increased interest payment amounts against your rental income.

I hope this is clear, in essence you are structing the mortgages so that there is a substantial amount on the investment property to reduce your tax liability.
 
"and then also when you are doing your tax return for what will be your investment property (and which used to be your PPR) write off the increased interest payment amounts against your rental income."

I'm pretty certain that this is an absolute non starter.

mf
 
Dowee said:
- and then also when you are doing your tax return for what will be your investment property (and which used to be your PPR) write off the increased interest payment amounts against your rental income.

I hope this is clear, in essence you are structing the mortgages so that there is a substantial amount on the investment property to reduce your tax liability.
Click to expand...

No, unfortunately not - only the interest on the existing loan on the PPR prior to it becoming an investment property is allowable.
 
Thanks for the replies.

Has anyone got a revenue or other link explaining the details of this?
 
Talked to the Revenue today and they said that you can do this.
I know I can't necessarily rely on a phone conversation with someone in there when it comes to this. Can anyone clarify what the actual situation is.
 
Dowee said:
Talked to the Revenue today and they said that you can do this.
I know I can't necessarily rely on a phone conversation with someone in there when it comes to this. Can anyone clarify what the actual situation is.
Click to expand...
Be very wary when you receive 'over the phone' advice from Revenue - I've been given incorrect information in the past year and so has ClubMan, so I'd take that with a bucket of salt!

If you have a bit of time, do a search on revenue's website - it'll probably take you a while to find what you're looking for, but you'll at least have something in writing.

There are also some threads on AAM in the Property Investment forum where this has been discussed previously - try searching there as well, as I recall advice was given by AAM's who have have specific knowledge in that area.

If you make a decision based on what they told you over the phone, you will have absolutely no comeback if the advice was incorrect. So maybe you should consider getting some independent advice instead.
 
Don't do it! We did and it was so much hassle. We lived in our house for 10 years and paid off the mortgage. We then moved to a bigger house and placed the trading up mortgage on our previous house to let it out. We recieved tax advice before hand and were advised that I should sell my half of the house to my spouse who could then claim tax relief on the interest. We did this and all went well until I read an article in a Sunday newspaper stating that this practice was not condoned by Revenue. They got a Finance Bill passed in 2002 to prevent this practice and they back dated it to capture anyone who did this in the past. We got an accountant to check it out and he confirmed the new rule and advised us to sell up. We sold because as well as losing that relief, the capital gains tax was costing a fortune because it is based on ppr years over rental years, therefore, even if the value of the house never increased, the cgt was increasing for every month that we kept it. By the way we called into Revenue to ask about it, but the tax clerk hadn't a clue what we were asking so we went to an accountant instead. Therefore, it is important to seek professional advice.
 
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