The truth about the new tax relief changes for landlords
The specialist knowledge of advisors has never been more important to buy-to-let investors, with tax changes coming into play next year.
From April 2017, landlords will lose the ability to deduct their mortgage interest costs from their rental income before calculating their tax bill.
Currently tax is due on profits at your highest rate of income tax. But between 2017 and 2020 this system will be replaced. All landlords will pay tax on the full amount less tax relief fixed at 20pc.
As a result every mortgaged landlord who pays 40pc or 45pc tax will pay much more - but so will some basic-rate taxpayers too, because the change will push them into the higher-rate tax bracket.
Very wealthy landlords who do not need mortgages are untouched.
Emma Coffey, head of Sales at Goldsmith Williams, comments:
“There is no doubt that these changes to tax policy will have an impact on buy-to-let investors. However, the sensible thing to do now isn’t to panic, but to seek the advice of those who are experienced and skilled in advising you.
“It has never been more important for buy-to-letters to enlist the assistance of brokers, accountants and solicitors experienced in the BTL field.
“This is your best bet in ensuring your investments stay protected in these changing times.”
Content correct at time of publication