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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 %.

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.

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