22 October 2000
A client purchased a house as his main residence with the assistance of a flexible bank loan of £240,000. Under the terms of the loan, the client is obliged to make capital repayments at the rate of £10,000 per annum but he may, if he so wishes, ask the bank to re-advance to him any amount in excess of his £10,000 annual commitment that has been repaid.
A client purchased a house as his main residence with the assistance of a flexible bank loan of £240,000. Under the terms of the loan, the client is obliged to make capital repayments at the rate of £10,000 per annum but he may, if he so wishes, ask the bank to re-advance to him any amount in excess of his £10,000 annual commitment that has been repaid.Our client has in fact repaid substantial amounts to his bank in accordance with this flexible arrangement; he now wishes to request his bank to re-advance excess payments over and above his annual £10,000 commitment with a view to investing the money in property.
Whereas this house purchase loan would not be eligible for tax relief, to the extent that the re-advance is received from the bank and reinvested in property, will the interest thereon rank for tax relief as an expense in our client's Schedule A income tax computation for his letting business?
(Query T15,708) Rog.
