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Mortgage interest tax relief – how the changes could effect your BTL

July 24th 2017
By: Melanie
Mortgage interest tax relief – how the changes could effect your BTL

In the past landlords have benefited from tax relief on their mortgage interest, however since April this year new changes has meant that the amount you can claim will be reduced between now and 2020/21. At the moment landlords can offset 75% of their mortgage interest against tax, in 2018 50%, 25% in 2019 and 0% in 2020. The change will mainly affect those landlords who are in the higher-rate income tax band, but other landlords might lose out on means-tested benefits.

However the change only applies to individual landlords and not those who run their properties through a company. However this could result in facing capital gains charges if they would like to sell in the future.

It’s not all bad news these new changes will only effect one in five landlords and if you are one of these you can carry on enjoying the benefits of owning a BTL. However we would always recommend that you seek the advice of a registered accountant and when the tax relief for the basic taxpayer will be lowered to 20%.

A survey from the Residential Landlords Association stated that two thirds of its members plan to increase rents to offset this new tax charge.1

If you would like to discuss any of the recent tax changes to BTL why not pop into your local branch of Intercounty for a chat and a coffee or call our team on 01279 655243.

1. http://www.telegraph.co.uk/investing/buy-to-let/new-buy-to-let-tax-works-andhow-beat/