any accountants in the house?

[katmarch]

http://www.direct.gov.uk/en/MoneyTaxAnd ... G_10014027" onclick="window.open(this.href);return false;

Self assessment, helped with the interest on the loan, could right off part of the income for tax purposes against the interest I was being charged from the bank.

[johnr]

ok, this is the very specific question i wanted to ask. due to circumstances outside my control, ive ended up owning two houses, the one we live in with a sizeable(100k+) mortgage, and our old house where we lived for nearly 20 years, which is mortgage free and we owe nothing on. ok so far. now we have a tennant in the other house paying rent. and, we also are liable for tax on the whole of our income on the rent as it is unearned income. so, what i was wondering is, could i take out a mortgage on the other house, for the sake of argument, say 40k, and then pay that 40k off the mortgage we have on the house we live in. now if we did that, we would reduce our payments on the house we live in, and then a good chunk of the rental income would be used to pay the mortgage on the place and we would only be liable for tax on the profit. that clear? im just not sure if we would be allowed to do this from a tax point of view. any ideas?

[Katman]

Dunno if the rules have changed (or indeed which tax bracket you're in) but upto a couple of years ago if you owned a 2nd property you were automatically put on 40% tax!!
Greedy bast*rds, as to question, dunno but one of my bruvs might know I'll ask him

[lomsavage]

i'm no expert

in theory it looks ok,
but (and a big one) they would probably not see the second mortgage as a legitimate business expense and as such you would not get tax relief on it
in fact its likely that they would just see whatever you raised as the second mortgage as "unearned personnal income" and thus tax you on that as a person

just a thought

H

[chris]

If I'm reading it correctly you have moved from the mortgage free home and bought another property in which you now live. You are now renting out the mortgage free property and are looking into taking out a mortgage on the rental property to pay off part of the mortgage of the new property. If this is the case you cannot claim tax relief on the new rental mortgage because the mortgage was not taken out to buy the rental property.

You will be in self assessment if your net rental income is more than £2500 or your Gross income is above £10000. Your tax liability will depend on your combined income (employment, your share or the rental income and any other taxable income less you allowance) so your property is not necessarily in the 40% bracket (I don't know if you are a 20 or 40 percent tax payer)

[johnr]

not higher rate, my mrs is on min wage so i can put it in her name so it doesnt push my earnings over any threshold, however, this time next month i might be bloody redundant anyhow so it seems to not really matter too much!! grrrrr