Mortgage Interest Tax Relief
As many of you will be aware the tax relief on mortgage interest payments for landlords was restricted to the basic rate of (20%) income tax from April 6th this year. Unfortunately this is just the start and it will be completely phased out over the next 4 years.
In an article by Painsmith Solicitors they explained how this is going to happen over the 4 years.
‘Tax year 2017/18 – 75% of mortgage interest will be fully allowable at the landlords prevailing tax rate and the remaining 25% available at the basic rate;
Tax year 2018/19 – 50% of mortgage interest will be fully allowable and the remaining 50% available at the basic rate;
Tax year 2019/20 – 25% of mortgage interest will be fully allowable and the remaining 75% available at the basic rate; and
Tax year 2020/21 – mortgage interest deduction will only be given at the basic rate.
These changes will not apply to limited companies and furnished holiday lets. However, anyone wishing to change their property ownership structure may need to take advice on any CGT and stamp duty implications as the ownership change would involve a transfer of the property.’
Landlords are being advised to assess their tax position and ensure they have made the most efficient arrangements possible. If you would like any further information on this please do not hesitate to contact us on 01327 879431.