DSG’S Monthly Tax Tip

Landlords and the Restriction of Mortgage Interest Relief

Posted by Sara Reynolds

Assistant tax and forensic manager at DSG

Thu 26th, Nov

In July 2015 George Osborne announced that the Government will restrict relief on mortgage interest payments and other finance costs to the basic rate of income tax, 20%, for all individual landlords of residential property.

This restriction will be phased in over four years beginning from April 2017.
Currently, landlords can claim relief for all of their mortgage interest payments against their rental profits, and so can obtain relief at 40% or even 45%.

However, it is not only those landlords who currently pay tax at 40% or 45% that will be affected. Those who currently pay tax at the 20% basic rate may be pushed into the 40% higher rate as a result of the changes.

What can be done to lessen the impact?

As the restriction is being phased in from 2017, there is time for landlords to consider their options and to think about ways in which they can lessen the impact.
If you are a residential landlord and you think the restriction may affect you, some straightforward suggestions are:

  • Consider borrowing more against commercial property.
  • If you have a trading company that owes you money, draw down this money and borrow within the company. Another option is to lend monies from new borrowings back to the company as full tax relief may then be available.
  • Consider transferring ownership or part ownership of properties to spouses or family members who pay tax at the basic rate. There may be capital gains tax implications so advice will be needed.
  • Making pension contributions to increase the basic rate tax band available (although there are limits on the amount of pension contributions that can be paid.
  • Consider whether it is worthwhile incurring additional expenditure, for example repairs, to reduce higher rate tax liabilities.
  • Ensure that every possible tax deductible expense is being claimed.
  • Make sure that existing mortgages are at the best possible rate.

What about substantial property portfolios?

For substantial property portfolios more complex strategies are possible, for example:

  • Transferring property into a limited company - the new rules don’t apply to companies so full relief would still be obtained for mortgage interest costs. However without careful planning transferring the property into a company could trigger a capital gains tax charge and stamp duty land tax could be payable. Mortgage lenders would have to be informed of the transfer, and new mortgage terms agreed.
  • In some circumstances a management company could be used to charge a management fee for services provided which would reduce personal rental profits. Care would need to be taken regarding the set up and operation of the company, and there would be company running costs to consider.

 

Our overall advice to landlords is to consider the impact the changes will have on their tax position and to seek our advice if they would like to explore any of the above suggestions in more detail.

Leave a comment

Comments...

Posted by Michael_Jack

Nike Shox R2 TOKYO (Reuters)Nike Air Max 2017 - Japanese Prime Minister Shinzo nike air jordans shoes for sale Abe accepted the question again,Nike Air Foamposite One but the review Air Jordan 26 has not yet made any real progress.Nike shoes sale Hundreds of Japanese people held a rally before the Nike Air Max congress and asked Abe nike lunar running shoes to step down immediately.Nike Air Max 90 Japan's House of Representatives Budget Committee on michael kors shoulder handbag the same day to review the Gakuen scandal,Nike Air Max Flyknit Abe and the former Nike kids kobe shoes Ministry of Science michael kors clothing mens and Technology Deputy mk wallets officials before Chuanxi Ping,Air Jordan 13 Abe assistant and Quan Yang and other scandal key figures appeared in the Council.coach backpack outlet store The parties did not make any real progress.Nike Shoes for Women About 12 Michael Kors Shoulder Bags o'clock Adidas Superstar local time, Nike Air Jordan 13 hundreds of people came to Congress,coach satchel outlet for the plus school scandal michael kors handbags online and other Abe government involved in Coach cases a series of issues to protest.Adidas Shoes Outlet They held the slogan of 'Completely Identifying the Gardening Parks' and shouting slogans of 'Adidas Yeezy 750 Boost Abe immediately stepped down'.michael kors watch Fukuyama Tetsuro,Nike Air Max TN Acting Director mk men's bags of the DPRK's Nike Free Run largest opposition Michael Kors Devon Shoulder Bags party, Nike Air Max 87 said at the rally that the Abe government was unaware of the day's deliberations.Coach bags 2017 Japanese nationals believe that the Prime Minister's Nike Kobe AD 10 residence and the Coach Accessories plus school scandal

Posted by jay tse

bank, but in the human mind. You do not find the way, does not mean no way, you want to know what to get in the future, you must know what should be given now! 23, the fate of people into the lowest point, is often the best period of life transition. Who can accumulate energy, who will be able to get a return; who self-confessed, will miss the opportunity! 24, everyone has two Air Jordan 6 Retro doors: one is the house, the growth of the place; one is the heart of the door, the success of the place. Can catch the door of the villain, will wake up the hearts of the giant! 25, to change things, first of all to change their own, only their own changes, can change the world. The greatest enemy is not someone else, but their own, only to overcome their own, to overcome the difficulties! 26, eight times a day mirror, not equal to the appearance of beauty; nine times a day empty talk, it does not mean that doers. Those who are good at hypocrisy are wearing a yarn that does not cover! 27, smart people can understand, smart people see prospective, clever people see far. The voice of the wise is the direction of the fool, can not give up the ignorance of the past, can not walk into the wisdom of the temple. Prejudice is more terrible than ignorance! And worry about the future, it is better to work hard now. This road, only struggle to give you a sense of security. Do not easily put a dream on someone else, and do not care too much about the whisper, because the future is your own, only you can give yourself the greatest sense of security. Do not forget to promise yourself to do, do not forget where you want to go, no matter how hard, how far.change others, the second is to change their own. Ask others to be very painful, that change yourself should be very happy. To change someone else, change yourself first! 29, beliefs change thinking, thinking change mentality, mentality change action, action change habits, habits change character, character change fate. Air Jordan 5 To change the fate, first Authentic Kids Nike Shoes establish the faith! Life, to move, to move, moved; life must be clear a concept: only to shorten the success of the sun and the moon, in order to extend the enjoyment of the life of the four days of space: width, depth, heat, speed; time! 31, fate is not to give up, but efforts. Fate Wholesale Air Jordan Shoes is not luck, but choice. Fate is not waiting, but grasp. Fate is not a noun, but a verb. 32, decided today is not today, but yesterday's attitude to life; decided tomorrow is not tomorrow, but today's career as a. We decided today by the past, our tomorrow decided by today! 33, winning is not by physical strength by intelligence, success does not rely on miracles by track. Success is not whether to get a good card, the key is whether the hands of bad cards to play well. The most important thing in life is to know where to go! 34, the problem is far more difficult than solving the problem, because the problem is technical, and the problem is revolutionary. We are not lacking wealth, but the lack of wealth to find the eyes! 35, the concept of change does not change things themselves, change only the understanding of things, but the concept can change people, people can change the world. Life is the most important character, Cheap Nike Shoes Sale attitude, ideas and values ??of life! 36, suspected to be the beginning of pain, doubt is the beginning of happiness. Doubt can be, verify more important, with its long suspicion, it is better to verify a short time! 37, experience is important, but the concept of the correct or not decisive role. Experience can only do the ready-made things, the concept is to decide the long-term direction. Thinking is higher

Posted by tt

How to Care for Coach Leather Handbags Coach outlet sale
Coach leather handbags cheap michael kors bags are very desirable and fashionable. Coach is known for its high-quality goods and its styles have passed the test of time. Michael Kors Jewelry Women proudly carry their Coach leather handbags for many years. They are, however, a major investment. luxury handbags Once you have purchased one, you will want to keep it in excellent condition to protect that investment. Coach Accessories on sale Be aware of where you are putting your bag; try not to place it on the floor. A purse hook is a handy little item to carry in your purse that lets you hook your purse to a tabletop or other flat surface.Coach casesCoach Jewelry
Lightly clean your purse once a month, or more often if you carry it in a dirty environment. You can use a baby wipe to lightly wipe the surface. There are also leather wipes available. You do not want to get your Coach leather handbag wet so do not use a wet cloth to clean it. coach campus backpack
coach crossbody bags on sale
Use Coach-brand fabric cleaner if your bag is a signature Coach bag made of fabric. The fabric cleaner should only be used on fabric bags.
Use a high-quality leather cleaner for heavier cleaning.coach hobo bag vintage
After cleaning your handbag, apply a high-quality leather moisturizer to help keep it conditioned.coach hobo bag vintage
To clean the inside of your bag, use the hose attachment on your vacuum and gently clean the inside.coach passport case
After cleaning, always store your handbag in the dust bag that came with it or a cotton pillow case. coach wallet men
coach accordion zip wallet
Lay it flat on a shelf and do not stack or crush your Coach leather handbags.coach accordion zip wallet

Post a comment