Almost a third of buy-to-let landlords are unaware of upcoming mortgage interest tax relief changes, according to the Council of Mortgage Lenders.
Out of 925 landlords surveyed, over 80% of those earning more than £100,000 per year said they are aware of the changes.
30% said that the changes would not affect them, however most landlords said it would damage their business.
Measures to manage the impact of higher tax bills included:
- 19% said they would raise rent and 5% have already done so.
- 20% are considering either transferring property ownership into a corporate structure or to a partner on a lower income tax rate.
From 6 April 2017 relief for finance costs on residential properties will be restricted to the basic rate of income tax.
Landlords will only be able to deduct a portion of finance costs from their property when calculating rental profits.
Finance costs include mortgage interest, interest on loans when buying furnishings and fees when taking out and repaying mortgages.
The changes will be phased in over 4 years.
|Tax year||Percentage of costs deducted from profits||Percentage of costs available as basic rate deduction|
For any help or advice with financial planning talk to RPD