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Tax & Renting Out Previous Residence Property


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I recently got married and live with my wife in a property owned by her. I still own another property myself which I had lived in for 10 years before moving in with her, and have been renting it out for the last few months. I have paid off the mortgage on my property, but we currently have one running on my wife's (our current home). The term on this is about to expire so I believe it will be tax efficient to remortgage my rented property instead and pay off our current mortgage, thereby enabling me to claim tax relief on mortgage interest. My salary (ie not including rental income) alone will certainly be enough to cover this mortage.

- Do I have to take out a buy-to-let mortgage on my property, or will a standard residencial one suffice? (a mortgage broker i spoke to said a residencial mortgage would be fine as i will not need to the rent to cover payments, but i'm not convinced this is right)

- Can I claim tax relief on the full mortgage amount, or just up to the original purchase price? (it is worth a lot more now than when i bought it)

- Is there anything better I could do from a tax saving perspective? (My wife is in a lower tax band than me)

Any suggestions would be greatly appreciated.

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  • 1 month later...

you should always inform the mortgage company of letting, but you dont necessarily have to remortgage. It can be done by consent to let.

You can claim the mortgage interest.

Mortgage interest (providing structuring is done right) can be claimed on a value up to the value of the property when it first enterest the rental market. If you hae had a property that has rocketed in value and have other unqualifying borrowings, then it could be beneficial for you to have loan interest structuring advice from a tax adviser

Hope this helps


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