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Is there a limit to the amount that can be claimed as ‘tax relief’?

Question

Is there any limit to the amount you can borrow and still qualify for full tax relief on an interest only mortgage?

 

Arthur Says

There is no limit providing all the borrowed funds are used ‘wholly and exclusively’ for the rental business. Where this is not the case, e.g. the taxpayer has a property that he is renting out and remortgages in order to withdraw capital from his business, to use for non rental business purposes, then the amount of allowable interest is limited to the extent that the loan matches the value of the property when it first started to be used in the rental business.

 

Where the loan is greater, the interest on the excess is not allowable. Please see the following article for further information on this: Use your investment properties to reduce the mortgage on your private residence and still offset the interest charged against your rental income.

 

 

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