30 SECOND SPEED READ – LANDLORD MORTGAGE INTEREST RELIEF ON RENT ROLLS
Mortgage interest relief for residential properties has been progressively reduced since April 2017…and it is about to be almost completely eliminated. From 6th April 2020, individual landlords will no longer get a deduction for financing costs, they will only receive a 20% tax credit. This means that higher and additional-rate taxpayers will get only partial tax relief on their interest payment costs, increasing the overall tax due on rental income.
Letting via a company may be an option for some landlords, in order to secure better deductions, but the potential costs (including CGT and SDLT on the transfer of the property to the company) may be prohibitive.
Property lawyers should seek tax input on the various options available to their clients, including incorporating their buy-to-let business.