Structuring loans across two properties

Our Experts Answer:

Regardless of the security for the loans the interest is only deductible from the loan that purchased the property now rented i.e the $199,000 loan. None of the interest on the loan that was used to buy your new home is deductible even if the old home secures the loan. Changing the loan security around won't alter this. You could consider a restructure that involves a new entity borrowing to buy your old home and using it to derive rent. This would release your capital to repay the debt on your new home. You must be mindful of tax avoidance rules so the resturucture would need to be commercially based and ideally part of a wider estate and matrimonial plan. You should seek advice from a chartered accountant.