Reducing payable tax when owning two properties with one rented out by playing with the mortgages?
Owing a house with a big mortgage(100k) and renting out another house with a 30k mortgage (worth 130k), can i re-mortgage the rental house to help pay off my home mortgage and reduce the amount of tax i pay? i can offset the rental mortage on my tax return. both mortgages are interest only.
i am
working, and earn around 30k.
Answer
Yes you can remortgage the renter but the lender will have rules on how much you can borrow ie could be say 80% of the value and the ren has to be 1.3 times the mortgage payments.the interest on the renter is offset against the rent income ie you pay tax on the difference between the interest payment and the rent income.
