Higher rate tax-payer landlords go corporate

Posted: 28/12/2016

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Are you a higher rate tax-payer and a landlord? If so you probably will be aware that from April 2017, interest relief on rented properties will be capped at the basic rate 20%. Currently, as a higher rate tax payer you will receive the higher rate of relief. This will have a particular impact on landlords with multiple properties and sizeable loans. For landlords paying just £5,000 interest a year it effectively means an additional £1000 tax to pay every year, so that mounts up where landlords have bigger portfolios and bigger mortgages. The rule doesn't apply to limited companies, so surveys are revealing that many higher rate tax payers are transferring their properties into companies that they set up. Of course there are pros and cons in doing this and you should speak to an accountant or tax advisor - if you don't have one, just ask us, we are happy to refer you. In the meantime, Key One Property continue to try and help landlords keep their costs low by offering low fees with no VAT. Contact us for a quote to let or manage your property - or both. Details of the tax change at: https://www.gov.uk/government/news/changes-to-tax-relief-for-residential-landlords

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