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Tax Implications for Buy-To-Let Property Reduces Rental Profits

Tax Implications for Buy-To-Let Property Reduces Rental Profits

Investing in buy-to-let property has become an increasingly more difficult endeavour as profit margins are being squeezed even further. Greater restrictions on mortgage-interest relief for buy-to-let properties, have resultantly made investing in buy-to-let properties a less attractive investment avenue in contrast to its formal years. Landlords were previously allowed to offset all of their mortgage interest payments against rental income; which helped reduce the amount of income tax they had to pay. In 2020/2021, landlords will only be able to claim a basic-rate relief on mortgage interest against their rental income. For many landlords, this will result in an increase in their tax bill and less rental profits from their property investments. Property investors should thereby review their strategy to accommodate this change by the end of 2021.

 

Source of information:

  1. https://www.theguardian.com/money/2018/apr/08/income-tax-changes-rates-student-loan-buy-to-let

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