Many buy to let landlords may already be familiar with the new rules that came into effect at the start of the new tax year on 6th April 2020, however we've summarised them below for those still not sure, and are happy to consult with anyone who wishes to learn more as to how the changes effect them.
From 6th April 2020;
1. The mortgage interest relief restriction takes full effect, meaning the cost of mortgage interest will no longer be an allowable expense in full for private landlords as it once once (although it has been restricted down gradually since 2017)
This means relief for mortgage interest payments will only be given at 20%. Higher rate (40%) and additional rate (45%) taxpayers will therefore see increases to their tax bills.
2. If a landlord sells a property, they will now only have 30 days to pay the capital gains tax on the sale, rather than waiting until the self assessment deadline.
3. Main residence relief rule has reduced the amount of time a landlord can now claim relief for on a property which they previously resided in as a home before renting out. Under the present rules, the last 18 months of ownership of the property count as ‘deemed occupation’, but this is being halved to nine months.
Again these rule apply to PRIVATE buy to let landlords, not those renting properties out through limited companies, where the rules are slightly different.
Please call us today if you have any questions about the new rules and how it effects your buy to let.