Posted by Admin - 04/05/2016
The tax relief landlords can claim for finance costs such as mortgage interest relief on residential properties to the basic rate of income tax, is changing.
This will be introduced gradually over 4 years from 6 April 2017.
Landlords will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits. Instead, landlords will receive a basic rate reduction from their income tax liability for the disallowed business costs.
Landlords will be able to claim relief as follows:
In 2017/18 the deduction from property income will be restricted to 75% of finance costs with the remaining 25% being available as a basic rate tax reduction.
In 2018/19, 50% finance costs deduction and 50% given as a basic rate tax reduction.
In 2019/20, 25% finance costs deduction and 75% given as a basic rate tax reduction.
From 2020/21 all finance costs incurred by a landlord will be given as a basic rate tax reduction.