Landlords look to limited companies in wake of tax relief changes
Increasing numbers of landlords are turning their properties into limited companies in response to tax relief changes.
According to Lender Mortgages for Business, in 2015 the number of landlords applying for loans through limited companies stood at 21% – today that figure is 77%.
This increase accounts for landlords setting up new limited companies and moving individually-owned residential properties into limited companies. The changes to tax relief do not apply to properties held by limited companies.
Changes to mortgage interest tax relief are being phased in between April 2017 and April 2020. As of 6th April 2017, tax relief will be restricted for landlords, and they will no longer be able to deduct in full mortgage interest when working out their profits.
In an attempt to protect their property investments, landlords are resorting to a range of options to help mitigate the effect of buy-to-let tax changes. This includes putting their property in the name of a spouse in a lower income tax bracket, and converting their buy-to-let properties into HMOs.
However, according to new research, some landlords have yet to grasp what these tax changes will mean when working out their profits. As such, landlords are being advised to seek professional tax advice to ensure they know what their obligations are and what their options are in response to the tax changes.
For more information, click the link below:
