Tax question from rookie BTL investor

[/dev/null]

Hi All,

Few years ago, with my wife we bought a house for £155k (£125k mortgage + £30k down payment). Over the years our family grew and we now feel the need of buying something bigger. The idea is to rent current property out, with 75% interest-only BTL mortgage and use released capital to buy bigger house. According to local valuator our property is currently worth £180k, which together with outstanding mortgage balance of £95k would hopefully release £40k of capital. This £40k would constitute a down payment for new residential mortgage. Now the question is, can I still deduct entirety of BTL mortgage interest from my tax bill? Even though this additional borrowing of £40k wasn't for investment purpose.

--
Cheers,
/dev/null

 

[Barny]

I would guess you may now know the answer to this, but I expect it is probably something others may be interested to now.

If I understand your question correctly, then yes, the interest associated to your BTL mortgage can be deducted in full. As far as I'm aware it doesn't really matter why you're remortgaging or where the funds are going, whether it is a deposit for residential, another BTL or just so you can buy a new car.

I'm not a finance expert so someone may be able to provide a more confirmed answer but considering this question is 5 weeks old and no-one has commented, I thought I'd advise of what I know.