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The forthcoming restriction on tax relief for interest on property-related loans: down from the taxpayer’s marginal tax rate to 20%, has been misunderstood by some landlords, says Rebecca Cave.

The restriction of financing costs for individual landlords of residential property is not a simple reduction in tax rate, but a change from a deduction of interest, to a relief that reduces the tax payable. On Budget day Rebecca Benneyworth provided examples of Osborne’s planned reforms, which illustrate how a landlord with a substantial property portfolio could pay tax on 144% on the accounting profit from his lettings business.

 

Authors: taxwriter

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