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Our client has an offset mortgage account made up of a loan on his main residence and a mortgage current account. Interest is charged on the loan balance after set-off of the current account balance. Instead of increasing the loan or taking a new one he drew from the current account capital to purchase a buy-to-let property so the interest charged on the loan has now risen.
Our query is whether the proportion of interest charged on the amount relating to the purchase of this property will be allowable against the rental income from it.
The balance on the loan account has not changed apart from the addition of monthly interest and the deduction of monthly payments so the increase in the amount of interest charged is due solely to the reduction in the mortgage current account balance as a result of the property purchase.
Our client...
