Mortgage Interest: What Landlords Can (and Can’t) Claim

✅ What You Can Claim

If you rent out a property, you can usually claim tax relief on mortgage interest – but only up to the value of the property when it was first let.

• You don’t need to have a buy-to-let mortgage. The loan can be on another property (like your main home), as long as the money was used to buy or fund the rental.

• The key limit is: you can’t claim interest on borrowing above the property’s value when you first started renting it.

📌 Example:

You bought a flat years ago for £100,000 and started renting it out straight away. Now it’s worth £400,000, and you’ve borrowed £300,000 against it to buy another property.

You can only claim interest on the first £100,000 – the value when it was first let. The rest doesn’t qualify for tax relief.

❌ What You Can’t Claim

• You can’t claim any interest on your own home mortgage.

• If you remortgage and borrow more than the property was worth when you first rented it, the excess interest isn’t claimable.

🏠 If You’re Letting a Residential Property (as an Individual)

• You don’t get full tax relief like you used to.

• Instead, you get a basic rate tax credit (20%) on your mortgage interest.

• This means:

  • You can’t deduct interest directly from your rental profits.

  • Even if you're a 40% or 45% taxpayer, you’ll only get 20% tax relief on the interest.

Need help figuring out what applies to your property? We’re happy to explain in plain English. Just ask.