Buy to Let Mortgage Interest Relief and Taxation
From April 2017 mortgage interest tax relief will start to be restricted to 20% for buy-to-let landlords. The relief could affect landlords who are both basic rate and higher rate tax payers. The changes will impact on higher rate tax payers and landlords with high mortgage costs and low rental income. Due to the tax relief changes landlords could move into a higher rate tax band.
The changes will be gradually phased in starting from April 2017 and from 6th 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
It is difficult to stay on top of the legislation changes (even for us and we do this for a living!) but working with a professional search agent will help ensure you’re always kept up to date with the latest changes and your rental properties are compliant with the law.
If you need more information on tax restrictions please contact the Inspired Investment team and we can put you in contact with one of our recommended tax advisors.