New partner, new property

Our Experts Answer:

Before you begin considering tax matters you probably need to look hard at the extent to which you wish to mingle your affairs especially if experiences with your ex are still fresh. From a tax perspective the key structuruing issue is ensuring you have the debt arranged in a way that maximises the interest deductibility. This will not be achieved if you borrow against the existing prioperties and use the money to buy a new personal home, as none of the interest on the new debt would be deductible. A solution may involve incorporating a look through company (LTC) that would borrow to buy the old homes. Interest on this debt would be deductible and any overall losses could flow to the shareholders subject to the LTC loss limitation rules. Your capital would then be freed up to jointly buy the new home together. As I say though, all your affairs are then intermingled from a banking and matrimonial point of view and this may not be appropriate if the relationship is relatively new.