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Restricting mortgage interest relief for landlords
Friday 6th April 2018
Landlords are no longer able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive a basic rate reduction from their income tax liability for their finance costs.
From now on Landlords will be able to obtain relief as follows:
In 2018 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 to 2019, 50% finance costs deduction and 50% given as a basic rate tax reduction
In 2019 to 2020, 25% finance costs deduction and 75% given as a basic rate tax reduction
From 2020 to 2021 all financing costs incurred by a landlord will be given as a basic rate tax reduction
These are some tricky new rules and calculations. If you are not sure how this will impact you, give us a call. We will take you through it step by step.
