Landlords need to be aware of changes.
No more so than now do Landlords need to be aware of impending changes to their industry, for the past year there has been major changes in the way they should operate and how their profitability should be calculated, most recently are the changes to their mortgage tax relief.
The most vunerable of landlords are those termed “accidental landlords,” they will be the least likely to be aware of the mortgage tax relief changes taking place due to new legislation. According to latest reported research from landlord insurance provider Direct Line for Business, 55% of new buy-to-let mortgage applicants are unaware of the mortgage tax relief changes.
Changes to the mortgage tax relief are set to be phased in from April 2017 with landlords no longer able to deduct mortgage interest payments before calculating their tax bill. They will instead get a tax credit equivalent to 20% basic-rate tax on this amount. Professional advice should be taken when dealing with individual tax returns and the way deductions are calculated.
The new tax rate has caused alot of concern in the industry and at present there are legal challenges being prepared against the proposed government legislation, also there has been a rise in the number of buy-to-let properties being bought in the name of a limited company so as to get around the additional tax cost, again professional advice should be taken with such matters.
Landlords are also set to be hit from April 2016 by stamp duty changes that mean anyone buying a second home or buy-to-let property will pay a 3% surcharge on their stamp duty bill.
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