Being a buy-to-let landlord can be tough. If keeping properties in good repair, complying with lettings regulations and finding good tenants is hard enough then changes to tax legislation is piling on the bad news. Tax relief on the interest being paid landlords is being significantly reduced.

Changes to tax regulations mean that tax relief on the interest paid to landlords is being halved by 2020/21 and as such it it worth considering how property portfolios are owned. There’s bad news and good news: these new tax rules apply to individuals and partnerships but not to Limited companies, letting of furnished holiday accommodation or commercial property.

From April 2017, the tax reduction for interest paid by landlords of residential properties will be significantly reduced. The change involves replacing the deduction of interest as a business expense with a tax reducer limited to the basic rate of income tax.

This change will be phased in over four years and will be in full force by 2020/21.

For example a landlord paying income tax at 40% will see the relief from tax on account of interest paid reduce by half over the four year period. This will have a significant impact on the landlords with buy to let portfolios.

Whether you need advice on how you manage property related costs to arrive at a profit calculation or if you are considering how to structure ownership of your properties, the Bedrock team can assist. Our team have considerable experience in advising on everything from Capital Allowances, Capital Gains Tax, Corporation Tax, Inheritance Tax, VAT and Stamp Duty Land Tax.

As a property owner your focus should be on fulfilling your aspirations and not worrying about the tax implications – let our team take some of the stress out of your property portfolio.

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Call us on 0115 778 8533 for a free consultation.

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