| SEVEN free property tax busting strategies reveal the secrets of how to legitimately beat the taxman and boost your property profits! |
UK Property Tax Portal 
UK Property Tax Q&A
UK Property Tax Q&ACan I offset interest repayments when borrowing money from a relative?
Can I offset interest repayments when borrowing money from a relative?
Question
I intend to borrow 40k from my father to help fund the purchase of a BTL property. I intend to pay him a fixed interest rate of approx. 6 %.
I intend to borrow 40k from my father to help fund the purchase of a BTL property. I intend to pay him a fixed interest rate of approx. 6 %.
Is this interest allowable against rental income and what documentation may the revenue require?
Ian Says:
The interest is allowable against the rental income. Your father would have to report the interest on his Tax Return and pay interest on it.
A simple loan agreement between you would be sufficient evidence together with a clear record of the amount being transferred into your account from his and clear records of the interest being paid.
For the avoidance of doubt, set up a standing order for the interest payments and ensure the agreement states the terms of the loan and the repayment date or terms for repayment of the capital.
Property Tax Made Easy