In the Summer Budget he announced reductions in the amount of mortgage interest payments that can be deducted against your rental income. This plan remains unchanged therefore:
- in 2017-18 only 75% of your mortgage interest costs will be deducted against your rental income, the remaining 25% will qualify for basic rate tax relief only;
- in 2018-19, 50% of your mortgage interest will qualify for full relief against rental income, the remaining 50% will qualify for basic rate relief only;
- in 2019-20, 25% of your mortgage interest will qualify for full relief against rental income, the remaining 75% will qualify for basic rate relief only;
- in 2020-2021 all financing costs will receive basic rate relief only.
The Chancellor has now announced further measures…
- The capital gains on selling a residential property will need to be paid within 30 days. If there is no capital gains tax to pay because the property is your home then this change will have no effect. You will need to ensure that you retain enough cash to pay this tax even if you are planning to reinvest your proceeds.
- Any future purchase of a buy-to-let or second home will be subject to higher stamp duty land tax. A further 3% will be added to each band of duty from April 2016.
Further information on the Summer Budget can be found here.
If you have a buy-to-let property and would like advice on how these changes will effect you, please call Clearways Accountants on 01737 244298
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