Tax changes for property investors are coming into force this week and Seven Capital has partnered with tax specialists, MHA MacIntyre Hudson, to produce a useful guide explaining the implications of the new rules and the steps investors can take to mitigate their impact.
What are the new landlord tax changes?
From 6th April 2017, landlords will no longer be able to deduct all their mortgage interest payments when working out their annual profits. Instead, mortgage interest tax relief will gradually be cut back to 20% by 2020.
Capital Gains Tax (CGT) on buy-to-let sales will now be due within 30 days – this is a significant change, as you could currently have up to 21 months to pay this tax.
These changes follow measures that came in just 12 months ago, increasing Stamp Duty Land Tax (SDLT) on second purchases and replacing the wear and tear allowance with a new regime.
What action do property investors need to take?
The guide provides information on the tax planning options available to property investors, including the potential benefits of transferring their property portfolio into a company where the full mortgage interest deduction will still apply.
The guide has been produced for investors to consider how the changes will impact on their particular circumstances – unfortunately there isn’t a ‘one size fits all’ solution.
However, taking the time to plan and consider the various options available now will be hugely beneficial in the long term, helping landlords to maximise the value of their investments. Seeking professional advice could also be prudent, especially for those with large, complex portfolios.