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I'm of the opinion that the new mortgage interest tax

Customer Question

I'm of the opinion that the new mortgage interest tax relief rules (as announced in the summer budget 2015) only apply to an individual if they have less than a set number of rental properties. Can anyone confirm this please?
Submitted: 5 months ago.
Category: Tax
Expert:  bigduckontax replied 5 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

The new rules are as follows and come in over a number of years, 2017 - 2021. Effectively they reduce landlord's tax relief to the basic rate of taxation only.

Here is an extract from the Gov UK web site:

'Landlords will no longer be 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.

Landlords will be able to obtain relief as follows:

  • in 2017 to 2018 the deduction from property income (as is currently allowed) 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'

I do hope that my reply has been of assistance.

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