Buy To Let Changes

Nov 11, 2016

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Have you heard about the changes to loan interest on buy to let property? I was prompted to write this because I’ve had a few enquiries from clients about it. But one specifically sticks to mind. This client had been recommended by her mortgage adviser to remortgage her own property in order to pay off the mortgage on her holiday let because of the changes. She was really worried about it as both her and her husband are higher rate taxpayers.

However what the adviser forgot to mention (or perhaps didn’t know) was that it doesn’t apply to holiday lets as they are seen to be a trading activity rather than an investment by HMRC – so the rules are different.

If you haven’t heard about this from 6th April 2017 tax relief on loan interest for residential property income will be restricted. The new rules will be phased in and could have a significant impact on you if you have a buy to let property. But it’s not something you should jump into without considering how it will affect you and what you could do to mitigate any of the effects of this.

The changes include some complexities, especially for those landlords with losses brought forward, irrespective of their marginal rate of tax.  So without careful planning the changes could cost some landlords thousands.

We’re happy to talk to you if you are affected by this. If you're a client we will already have spoken to you about this, but please get in contact if you have any concerns.


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