How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TaxRobin Your Own Question
TaxRobin
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 15301
Experience:  International tax
14155347
Type Your Tax Question Here...
TaxRobin is online now

I am a landlord who owns several properties. The rental

Resolved Question:

Hi I am a landlord who owns several properties. The rental income goes into a Ltd Company that generates accounts every year. I also work full time for a Developer and earn around £37,000 via PAYE. The rental properties all have interest only mortgages that are offset against the rental income, the properties are in my name but the rental income etc is paid through the Ltd Company. Will the new rules on buy to let mortgage interest affect me and if so how badly?
Submitted: 1 year ago.
Category: Tax
Expert:  TaxRobin replied 1 year ago.
HelloThere is no change in the overall tax liability for a basic rate taxpayer. As you have your investment through a limited company, there is currently no proposal for restricting the deduction of financing costs within companies. You need to look to transferring the property into the limited company as well as arranging a new mortgage, or do nothing and pay any additional tax on the gross income including your rental profit before tax deduction (additional 20% tax on the increase).Your taxable income is calculated without the deduction for interest. That is what would cause the increase.If the Ltd held the properties and the mortgage was in the name of the Ltd this would not effect your personal rate.Having the rental paid through the Ltd only is not possibly enough to avoid this change. The restriction will be phased in over four years, starting from April 2017.
Customer: replied 1 year ago.

Thanks am I no longer allowed to offset the mortgage interest payment for the mortgages? For example mortgage interest payment on Flat 1 is £395,00 rental income is £425.00 do I now have to pay tax at 40% on £425.00 instead of the profit of £30.00 this is what I want to know

Expert:  TaxRobin replied 1 year ago.
You cannot claim the offset for the full interest.in 2017-18 the deduction from property income (as is currently allowed) will be restricted to 75% of finance costs, with remaining 25% available as a basic rate tax reduction;in 2018-19, 50% finance costs deduction and 50% given as a basic rate tax reduction;in 2019-20, 25% finance costs deduction and 75% given as a basic rate tax reduction; andfrom 2020-21, and beyond, all financing costs incurred by a landlord will be given as a basic rate tax reduction.- See more at: https://www.accountancylive.com/summer-budget-2015-40-tax-relief-buy-let-landlords-phased-out#sthash.3IUtcEnR.dpuf
TaxRobin and other Tax Specialists are ready to help you

Related Tax Questions