Buy to Let has seen some significant tax changes, the key points are summarised here:
· Restriction of finance costs over the next four years.
These do not apply if you have a holiday let or the property is held in a limited company.
For 2017-2018 you will not be able to claim the full amount of interest paid on a loan used to purchase our buy to let property. The amount you can claim will reduce over the next four years:
To 5 April 2018 75%
To 5 April 2019 50%
To 5 April 2020 25%
To 5 April 2021 0%
There are a few more technical points around how the finance costs and allowances are calculated but, given the potential of interest rate rises, this could mean a significant increase in the running costs of your buy to let property as well as an increase in the tax you will pay from the profit made.
· Capital allowances, repairs and wear and tear allowances
These allowances have changed subtly over the last two years and there may be costs on repairs and renovations that could be structed in a more selective way to ensure you get the maximum benefit from them.
· Landlord Expenses
Individual landlords will be permitted, from April 2017, to use the fixed rate mileage deductions currently available to traders
What does this mean for you? Book a Buy to Let review now