HOW SECTION 24 WILL EFFECT YOU
As a result of the chancellor’s decision in the 2015 Summer Budget we have recently seen changes to the taxation of buy-to-let investments. From the beginning of April buy-to-let investors were unable to offset their mortgage interest against profits and within 3 years none of the interest will be tax-deductible. This has led to many landlords paying more tax and some being taxed on non-existent profits.
From the beginning of April landlords can offset only 75% of their mortgage interest against profits, reducing to 50% next year, 25% in 2019 and 0% in 2020. The changes mentioned only apply to private individual landlords.
In result of the changes landlords will need to become more focussed on their costs and plan ahead. Many landlords who have been putting off understanding the impact of tax on them need to assess advice and understand how the changes will affect their income. Any landlords with a small portfolio or that will not be crippled by the taxes still need to focus on cost by lowering mortgage rates, reducing mortgage amounts or raising rents.
As the changes are only applicable to private individual landlords and not landlords who own property through a company the market may see an increase in landlords moving individually owned properties to company ownership. This is not necessarily positive as it may lead to a capital gains tax charge.
If you are a landlord unsure of how to proceed or looking for someone to manage your property please contact The Organisers Managing Director Katie Shapley or a member of her team on email@example.com or call 0207 078 7554 to discuss your requirements further.