Mortgage to keep or acquire a property

If a take out a new mortgage to acquire a rental property can I gain mortgage interest tax relief according to the usual rules even if the mortgage lending is secured against a different property that I also own?

Hi,

Relief for interest would be allowed as long as the mortgage is taken out against the rented out property. If so then it does not matter if if is secured against a different property.

Thank you.

Thanks, do you have definitions please of ‘taken out against’ and ‘secured’?

Also, do the same rules apply for a new mortgage entered into in order to keep a rental property that I already own? (ie is it ok to claim tax relief even if that mortgage is secured against a different property so long as it is clearly attributed to the rental property in question?).

Hi,

You can find the definition of a secured debt in CG53401.

CG53401 - Securities: debts: what is a debt: secured debts

The definition of taken out against is the same as secured.

Thank you. 

Hi again, I'm sorry but these two replies you have provided me with do not appear make sense when taken together. If 'taken out' and secured' mean the same thing and it is ok to claim tax relief on a mortgage secured against another property then how can it be necessary - or even possible - for that mortgage to be 'taken out against' ie 'secured' against the rented out property when it has already been secured against another property? I note that the guidance on this matter (https://assets.publishing.service.gov.uk/media/6419c3758fa8f547c7ffd689/SA105_Notes_2023.pdf) does not refer to a mortgage being either 'taken out' or 'secured', it simply refers to 'finance costs.' So I assume that if the 'finance costs' can be demonstrated to apply to the rented out property then it the precise details of the loan do not matter?

Hi,

As as long as the mortgage is taken out in respect of the actual rental property then it can be secured against another property.

Thank you.

Hi,

If the mortgage that has been taken out has already been secured against another property then it would not also have to be secured against the actual rental property.

If the borrower fails to make the mortgage payments then the lender would have the rights over the other property and not the actual rental property.

If the mortgage has been acquired in respect of the actual rental property then you would to entitled to claim the allowable finance costs.  

Thank you.