Tax issues for landlords of residential property

Whether you are already a landlord, or considering purchasing a buy to let property, it is important you understand the relevant complex tax rules so that you can make informed decisions on how to structure and finance your property.

From April 2017, where a mortgage has been used to fund a buy to let property, there may be a restriction on the tax relief claimed on the interest. If you receive higher or additional rate tax relief on your mortgage interest, will be reduced to basic rate tax relief only, over a four year period.

Landlords also need to understand how to correctly claim expenses which are ‘wholly and exclusively’ related to the rental property, including the costs of refurbishing or refitting a property to arrive at the taxable rental profits. From April 2016 wear and tear allowance (equal to 10 per cent of rents) will be replaced with a new relief allowing residential landlords to deduct the actual costs of replacing furnishings.

RSM can help you to evaluate the pros and cons of how you own your property portfolio and advise on the most tax efficient arrangements, taking into account the above issues.

If you would like more information download our sweeter tax planning ideas or contact Joan Foster.