Changes to mortgage interest tax relief are being phased in from this month, buy-to-let investors in London’s West End should note.
As of April 2017, landlords will no longer be able to deduct mortgage interest in full from their profits before they pay tax as tax relief will be restricted.
These restrictions will be phased in gradually over several years, meaning landlords will not feel the full effects of the change until the 2020/21 tax year.
Chair of the Chartered Institute of Taxation’s Property Taxes Sub-Committee, Brian Slater, said: “This is one of the most significant changes to the buy to let market in decades and will particularly affect heavily geared buy-to-let landlords.”
However, Slater stressed that the changes will be phased in slowly, and warned landlords against taking rash decisions as regards selling their buy-to-let properties.
He said: “it is sensible for landlords to be cautious about making any knee-jerk moves in response to the changes”.
In response to these changes, first announced by former Chancellor George Osborne in 2015’s Summer Budget, landlords have been weighing up their options in a bid to protect their profits. From HMOs to setting themselves up as a limited company, or putting their property in the name of a spouse, if landlords are proactive and seek guidance, investing in buy-to-let can remain profitable.
For more on this story, click the link below: