The amount of Income Tax relief landlords can get on residential property finance costs will be restricted to the basic rate of tax.
The restriction will be phased in gradually from 6 April 2017 and will be fully in place from 6 April 2020.
Residential landlords will still be able to deduct some finance costs when you £0working out taxable property profits during the transitional period. These deductions will be gradually withdrawn and replaced with a basic rate relief tax reduction.
You’ll be able to use some of your finance costs to work out your property profits and use your remaining finance costs to work out your basic rate tax deduction.
In the 2017-2018 tax tear, the percentage of finance costs deductible from rental income will be 75% and the percentage of basic rate tax reduction will be 25%. These change respectivley in 2018-2019 to 50% and 50%, in 2019-2020 to 25% and 75% and 2020-2021 to 0% and 100%. £0
Should you require further advice regarding this or would like referring to a reputable accountant or I.F.A to advise you further, please contact us. £0