Tax implications of financing BTL after purchase.

Ipro

Hi guys does anyone know if there are any tax implications to backfilling a mortgage ?

For clarification please see below.

We base this on the person having €400k cash in the bank.


Example 1

Purchase €400,000 property using BTL mortgage.
€100,000 deposit is handed over and the remaining €300,000 is paid by the bank to the vendor.
In this example I have 300k cash left over in my account that’s mine to do what I want with , to be spent on a holiday for argument sake.

Example 2
Purchase €400k property for 400k cash (a great deal has come up and it’s dependant on a quick close)
Go to the bank shorty afterwards And remortgage. The bank give me 300k.

In both cases I would be left with 100k in the deal and a 300k mortgage. My question is,,
A) is this 300k I get from the bank taxable ?
would I still be entitled to claim interest relief in example 2 , like I would in example 1.

It’s my understanding that the interest relief is only for loans which have been used to purchase the property. So if I bought it cash and remortgaged and spent that 300k on a holiday for argument sake then the money hasn’t really been used for the purchase of the property. Is there an exception from revenue in such circumstances that allows people to buy quickly with cash and take the mortgage out afterwards.

When giving your answer appreciate if you can state if your referring to property owned in own name or via company as interested in views on both.

Thanks !

Geuze

Mortgage interest relief on PPR is abolished.

https://www.revenue.ie/en/property/mortgage-interest-relief/index.aspx

Darc19

Geuze wrote: »

Mortgage interest relief on PPR is abolished.

https://www.revenue.ie/en/property/mortgage-interest-relief/index.aspx

Op is talking about a buy to let and the different timings of taking a mortgage and whether the interest charged is a deductible expense.

It's an interesting question, I would assume that as it's attached to the property that the interest on the mortgage is a deductible expense.

I'd double check with an accountant or ask the question on askaboutmoney.com

daheff

The 300k you get from the bank is not taxable as it's not an income. Any funds received from letting the property are taxable as it's income (assuming you are not a legal entity set up to trade as a landlord. Then only profits are taxable.)