Withdrawal of Mortgage Relief on Buy-to-Let Properties

From April 2017 landlords will no longer be able to claim higher rate tax reliefs worth 40% or 45% of the interest payments on their buy-to-let mortgages. Instead, the maximum relief will be set at the basic rate of 20%, although the change will be phased over a four year period. This will effectively double the cost of borrowing for those paying the highest rate of tax.

Under the withdrawal of interest relief, in 2017-18 landlords will only be able to apply the existing relief rules to 75% of their finance costs with the remaining 25% using the basic rate reduction. The following three years will see the proportion change to 50:50, and then 25:75,  before the basic rate applies in full from 2020-21.

From April 2016, property investors will also lose the right to automatically claim 10% of the rent against wear and tear costs. From this date, they will only be able to deduct costs that they actually incur.

If you think this is likely to affect you and would like advice specific to your situation, please make an appointment to come in for a chat.