From April 2017 the Government introduced a new restriction on claim mortgage interest as a cost against residential property letting.
Its being phased in
2018/19 50% of the interest can be claimed in full and 50% will get relief at 20%
2019/20 25% of the interest can be claimed in full and 75% will get relief at 20%
2020/21 100% will get only 20% relief
The rules don’t apply to
- Companies
- Furnished Holiday Lets (which will include Serviced Accommodation if they meet the FHL criteria)
- Property Development and Trading
- Commercial Property in a mixed use building
The rules do apply to
- BTL’s
- HMO’s
- Partnerships including LLP’s
- Individual Landlords
- Trustees
What loans will it apply to
- Loans taken out to buy residential property for letting
- Existing loans and mortgages of a residential landlord
- Loans taken out to purchase an interest in a property letting partnership
What costs are within the scope of clause 24
- Interest
- Finance Costs
- Incidental costs such as broker fees and loan related legal costs
How much difference does having a residential investment company make to a higher rate tax payer?
