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Up loan creek?

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14 April 2009
Issue: 4201 / Categories: Forum & Feedback , Capital Gains , Income Tax
A taxpayer used a shared appreciation mortgage, secured on her main residence to purchase a buy to let property. Can any tax relief be obtained on the amount repaid either for capital gains tax or income tax purposes?

A client (not a client at the time this all happened) had a main residence and took out a mortgage with a bank to acquire a buy to let flat.

This was done using a SAM (a ‘shared appreciation mortgage’) secured on her main residence and not on the buy to let property.

She later sold her main residence (whilst retaining the buy to let) and repaid the SAM with the proceeds.

The loan was for £75 000 but she was required to repay £165 000 to the bank which took 75% of the appreciation in the value of the buy to let. The buy to let property was subsequently sold in June 2008 with a substantial gain arising.

We would appreciate views on whether or not any form of tax relief might be due either as deductions against the buy to let rents or for capital...

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