Hi
In a hypothetical situation John Smith owns property 1 which has no mortgage on it. He works and lives 3 hours away and owns property 2 there which has a mortgage on it. Property 1 is as such a holiday home.
He decides to rent property 1 for a few years in order to bring in some extra income to help pay off mortgage on property 2. He will not be selling property 1 and plans to use it as a holiday home and potentially retire there in future.
From the taxation point of view on potential rental income from Property 1, as there is no mortgage on it (and it is not his Principle Private Residence at any rate) there is obviously no 75% property relief that can be claimed.
So is the fact that he has a mortgage on property 2 completely irrelevant? i.e. his property 1 return is (Rental Income - Allowable Expenses) taxed and USC'd at normal rates and nothing else is a factor ?
Or are there any cross overs or reliefs that would apply here based on his having property 2 mortgage ?
I'm pretty sure the answer is that they are two completely separate calculations and no overlap or possible reliefs exist but just want to be sure.
In a hypothetical situation John Smith owns property 1 which has no mortgage on it. He works and lives 3 hours away and owns property 2 there which has a mortgage on it. Property 1 is as such a holiday home.
He decides to rent property 1 for a few years in order to bring in some extra income to help pay off mortgage on property 2. He will not be selling property 1 and plans to use it as a holiday home and potentially retire there in future.
From the taxation point of view on potential rental income from Property 1, as there is no mortgage on it (and it is not his Principle Private Residence at any rate) there is obviously no 75% property relief that can be claimed.
So is the fact that he has a mortgage on property 2 completely irrelevant? i.e. his property 1 return is (Rental Income - Allowable Expenses) taxed and USC'd at normal rates and nothing else is a factor ?
Or are there any cross overs or reliefs that would apply here based on his having property 2 mortgage ?
I'm pretty sure the answer is that they are two completely separate calculations and no overlap or possible reliefs exist but just want to be sure.