Can I claim tax relief on a joint mortgage?

[Heron]

Hello, I wonder if anyone can advise with this. I bought my rental property in my sole name and did this by re-mortgaging for 80k on marital home and the re-mortgage is in joint names with my spouse. My question is can I claim tax relief on all of the interest paid or only half, as it is in joint names ?

[Richlist]

Well its my understanding that HMRC consider the default for joint ownership / mortgages are on a 50:50 basis. So, logically you can only claim half the interest payments used to purchase your BTL.

I'd suggest you get some professional advice to see if there is any way that you can utilise more than 50% of the interest payments on your residential mortgage.

A nominal 2% interest on £40K is £800 a year.....so any fees you incur are likely to be cost effective.

[Chestnut]

My understanding too.

Changing proportion of tax relief between joint owners with differing tax liabilities would, as I understand, require legal change to joint ownership deed to specify a ratio required different from default 50/50. One needs to consider legal costs of changing deed and its effect on eventual inheritance situation between partners against any likely benefit. Some years ago this was discussed on this site.

[Richlist]

Here's HMRC's attempt at a clear explanation:

http://www.hmrc.gov.uk/manuals/saimmanual/saim10030.htm

Its probably best to transfer the BTL into joint names but you still need to take professional advice.

[Heron]

Hello Richlist & Chestnut,

Thank you for your response.

Your reply was very helpful and much appreciated and gave me the information and guidance I was searching for.

Thanks again and best wishes.