Loan vs Mortgage

When buying property to let (abroad), taking a loan (from a UK bank) to finance the purchase, is interest rate deductable (at basic rate) from rental income even if the loan is secured against a different asset (house in the UK)? The loan is in its entity used for the purchase abroad.

Hi,
Interest and loan costs can be included In the SA105 box 26 under Non Residential Property Finance Costs.
Thank you.

Yes, in the UK, if you take a loan to purchase a rental property abroad, the interest on that loan can generally be deductible against rental income, even if the loan is secured against a different asset (such as a UK property), as long as the loan funds are used solely for the foreign rental property purchase. This can help reduce your tax liability on rental income, but the deduction is limited to the basic rate (currently 20%). To claim this, you’ll need to clearly demonstrate that the loan was taken for the purpose of purchasing or improving the rental property abroad. Proper documentation of the loan's purpose and use is crucial, as HMRC may request proof that the funds were fully applied to the foreign property investment.