Changes to Landlord Tax Relief - Budget 2015
The Chancellor announced in the newly elected Government's first Summer Budget (July 2015) that Mortgage Interest Relief for residential landlords would be restricted to the basic rate of income tax (20%).
How does this affect me as a Landlord?
Mortgage Interest Relief
Under the current rules the full amount of finance costs paid by Landlords are allowed as deduction against rental income.
The new rules will be introduced gradually over a three year period starting from 6 April 2017, and relief will be available as follows:
- In 2017/18, the deduction from property income will be restricted to 75% of the finance costs incurred, with the remaining 25% being available as a basic rate reduction.
- In 2018/19, 50% of the finance costs will be given as deduction and the remaining 50% will be given as a basic rate reduction.
- In 2019/20, 25% of the finance costs will be given as deduction and the remaining 75% will be given as a basic rate reduction.