From next year, the higher rate tax relief is being phased out between 2017 and 2020 and being replaced with a tax credit. The impact and consequences of this are far reaching and it is currently the 'Elephant in the Room' that nobody is talking about. Barclays have just revised their rental income calculations to 145% at 5.5% interest rate which in their words are being "introduced as a result of the reduction in landlord tax relief"
For anyone who has rental property and is or is likely to be a higher rate tax payer, the planning and understanding of how this affects your investment starts now! If you are renewing your buy to let mortgage product, understanding your financials for now and the next 4 years when it is fully implemented is crucial.
In some cases, you could owe more tax than you make in profit, so the threat to landlords financial position is at risk.
We've developed a calculator that will give you a forecast for the next 4 years, so if this is of concern or you want to know how this looks for you and your portfolio, then contact us on (01483) 487417 or email us at business@crystalclear
This is the biggest elephant in the room that is not going away!