Are you ready?
From next month, April 2017 mortgage interest tax relief will start to be restricted to 20% for all buy to let landlords. The relief could affect landlords who are basic rate and also higher rate tax payers. The changes will impact in particular on higher rate tax payers and landlords with high mortgage costs and low rental income. Many landlords fear that they could move into the higher rate tax band.
The mortgage interest tax changes will be phased in starting next month:
From 6 April 2017, the existing system can still be claimed on the first 75% of your mortgage interest costs. The remaining 25% will have the new system (basic rate of tax relief) applied.
From 6 April 2018, the amount of tax relief you can claim on the existing system will drop to 50% of your mortgage interest costs. The remaining 50% will have the basic rate of tax applied.
From 6 April 2019, the tax relief using the existing system can only be applied to 25% of your mortgage interest costs. The remaining will be at the basic rate.
From 6 April 2020, you will only be able to claim tax relief using the new system (basic rate level). The tax relief will be given as a reduction in tax liability instead of a reduction to taxable rental income.
As a Landlord, how can I remain informed with all the changes that may impact me?
Homesale and Homelet are members of the National Association of Estate Agents (NAEA) and the National Association of Letting Agents (NALS), so can help advise you on your rental properties so they are compliant with the law. If you need advise, please contact Lisa or one of the team on 01244 316338. We will be delighted to help with any questions in relation to renting or selling your property or achieving your property goals.
For more information in relation to the tax relief changes, please click on: