Buy to let house and tax relief



Dear All,

This subject has probably been done to death and I apologise if my posting on the subject is unwelcome repetition. However, I wanted to seek advice that is both current and applicable to my particular situation.

I am in the process of buying a second house, in England (where my first and only other property is). The second house is being paid for out of my owncash (i.e. no mortgage) and it will be rented out. My intention is to raise a mortgage on the second property, after purchase, and use that money to pay off some of the mortgage on the house I own and live in.

As I understand it, I can obtain tax relief on rental payments corresponding to the interest component of the mortgage I raise on this second house. Is this correct? Are there any pitfalls that I should be aware of? For example, does it matter that I will buy the house outright, in cash, before raising a mortgage? Does it make any difference, finanacially, whether the house is in my name or my wife's? Currently, the house that I own and live in is in my name and the second house will also be in my name (unless I get on the blower to the solicitor fairly sharp-ish).

Thanks for any advice you can offer.




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