Can I get a buy-to-let mortgage and part occupy the property myself?

Posted on 1 September 2007

I am thinking of getting a buy-to-let mortgage and partly occupying the property myself at <40%.  Are there any adverse tax implications for me if i do this?

 

Hi Gary,

 

A buy-to-let would not suit you for this i'm afraid: the lender does not allow you to live in it, neither would it be tax exempt from income tax in the same way as normal BTLs are.  Your own address must always be a residential property separate to a BTL.

However, you could get a residential mortgage and have lodgers in the other rooms. Scarborough would consider this, West Bromwich and Mortgage Express both used to do a rent-a-room arrangement where you could buy a property using a residential mortgage, but add £4,250 income to your own to represent the rental income from the lodger. West Bromwich allowed a further £3,188 for a second lodger. Whilst they don't have these schemes any more, per se, I expect they will agree to look at the proposition still, now that they have accepted it as a concept. I would also try Capital Homeloans who I believe allow lodgers too.

As for the tax angle, I believe you still get your capital gains tax relief due for main residences if you have one lodger, but a accountant or solicitor would have to go through this with you: You should apparently avoid having more than one lodger for the last two or three years of living there.

Katie

Category: Buy-to-let, Tax issues

 

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