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Transferring equity between mortgages for taxc purposes

  • 19-11-2009 2:57pm
    #1
    LadFromLimerick
    Registered Users, Registered Users 2 Posts: 78 ✭✭


    Hi all,
    I have 2 mortgages at the moment (same as everyone else in the country it seems!), mortgage 1 is on my own residence and mortgage 2 is on a rental property.
    Mortgage 2 is nearly paid off and therefore the interest I can write off against my rental income is minimal. Is there anything stopping me from releasing equity from my rental property and using it to pay off some of mortgage 1 (which would increases the interest payments on mortgage 2 and therefore reduce my tax liability on the rental income).
    Would appreciate any advice.


Comments

  • #2
    Bobby1984
    Registered Users, Registered Users 2 Posts: 269 ✭✭Bobby1984


    This is forbidden. Only interest on the funds used to purchase the rental property are allowed as a deduction against rental profits when calculating your income tax. You cannot take out a new loan on this house to buy a car, go on hols or pay off another mortgage on your private residence. You will already be getting mortgage interest relief whether at source or on your income tax return (max relief for 2008 was €1,200).

    Hope this answers your question!


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