Raising business finance and tax issues

I am setting up my own business soon and I plan to re-mortgage my current home to raise the start up capital.  Will the interest payable on my mortgage be considered a tax deductible expense against my business profits?

1st October 2008

Whether or not the interest is deductible depends on the purpose of loan. Although the loan will be financed by other means, (and in your case on your personal residence), the interest on the element that will be used wholly and exclusively to fund your new business venture is an allowable deduction when establishing the net profit from your business activity.

However, you can only claim a deduction for the amount of “qualifying interest” which applies to the business. This is the interest paid on the amount of the loan used for your business, and any interest payable on the element relating to your existing residence is not deductible against the profits from your business.

By Jo Nockels

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