fbpx
Buy-To-Let Mortgage Interest Costs No Longer Tax Deductible from 2020

Buy-To-Let Mortgage Interest Costs No Longer Tax Deductible from 2020

From 2020 and beyond, residential UK landlords will no longer be able to deduct all of their financial costs (such as mortgage interest, mortgage fees or interest on loans to purchase furnishings) from their rental income. Instead, landlords will be subject to a tax reduction at a basic rate based on their income tax liability for all incurred financial costs. This change will reduce the profits for an individual buy-to-let landlord (particularly those who are higher rate taxpayers) which highlights the importance incorporating these changes into your calculations when calculating yields and capital return on investment. One way of avoiding this all together is to invest in property via a private limited company; as financial costs remain currently deductible from rental income. Clearly, forecasting these changes when undertaking due diligence for any investment property is essential. As the general saying goes: failing to plan is planning to fail! So plan ahead

 

Source of information:

  1. https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords

Leave a Reply