78% of residential landlords understand what the changes to mortgage interest tax relief involve, as confidence grows in the buy-to-let sector.
As landlords gain clarity over what their obligations are in the wake of tax changes affecting the buy-to-let sector and explore their options in an effort to protect their profits, confidence levels are rising.
In the final quarter of 2016, 11% of landlords said they did not understand the implications of these tax changes, compared to 7% today.
Changes to mortgage interest tax relief are being phased in from 6 April 2017, and will be implemented in full by April 2020.
As of April 6 2017, landlords owning properties as individuals (these changes do not affect BTL properties owned by companies, or individuals owning commercial investment properties) are no longer able to deduct all of their mortgage interest when working out their profits. The changes will be phased in over four years.
By 2020/2021, landlords will be allowed a tax credit of 20% of the amount of interest they have paid in the year. For higher rate taxpayers, this will halve the tax relief they have until now been enjoying. This is just the latest in a line of measures designed to inhibit buy-to-let investor activity.
But the latest findings are positive, and the boost in confidence among landlords is proof that more landlords have a better understanding of the tax changes which affect them.
However, the full impact of the changes won’t be felt by landlords until 2020, so it’s as well that landlords make sure they are aware of their options in the meantime, and know how these changes will affect them now and in the future.
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