How Buy-to-let tax changes affect you?
The new tax year 2017/18 saw the introduction of changes to the taxation of buy-to-let investments as landlords consider how best to protect themselves from higher tax bills.
Any landlords with buy-to-let investments are now unable to offset all their mortgage interest against their profits from rental property income. This reduction in the available relief is being phased in between now and 2020. Since April 6th 2017 landlords can only offset 75% of their mortgage interest against their profits, this figure reduces to 50% from April 6th 2018 and 25% in 2019. From April 2020 landlords will not be able to offset any mortgage interest against their profits.
Amy Kadir, Mortgage Broker, Lonsdale Mortgages and member of the St Albans mortgage broking team said: ‘Given the recent and proposed tax changes it has never been more important to get independent mortgage advice about a buy-to-let investment. Read my article – Why use a mortgage broker. The changes only apply to private individual landlords and not to anyone who owns their property through a company. It is important to remember that although only higher rate tax payers are affected when rental income is included some basic rate tax payers may be pushed into the higher rate tax band. When you get independent advice on buy-to-let investments we recommend you consider your current and future earnings potential.
How can buy-to-let landlords act to avoid higher tax charges?
Amy Kadir, Mortgage Adviser, Lonsdale Mortgages St Albans said: ‘We are currently in discussion with several buy-to-let landlords considering the best option for their individual financial circumstances. There are a variety of options available to any buy-to-let landlords. These include selling your buy-to-let properties, or moving the properties inside a company. However, please be aware there are costs associated with setting up a company structure for your buy-to-let portfolio. At Lonsdale Mortgages we consider all options but we will check if you can get a lower mortgage rate for your buy-to-let portfolio. We also may recommend you consider re-mortgaging your main residence so you can pay off some of your mortgage on your buy-to-let portfolios, as you may be able to get a lower mortgage rate on your residential property. You could also consider reducing the outstanding mortgage amount on your buy-to-let portfolio.’
If you would like mortgage advice and want to review a buy-to-let investment please contact Lonsdale Mortgages on 01727 845500. We do not take a charge from you for our mortgage advice as we receive commission from the lender when your mortgage is approved. At Lonsdale Mortgages customer service is important to us. Read Amy Kadir, Mortgage Broker gets excellent mystery shopper score.
‘As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments’