Landlords in the United Kingdom aware of the coming tax reform have decisions to make in order to save the profitability of their buy-to-let properties. The smartest choice is to remortgage and take advantage of the current low rates. By getting a lower rate these landlords will be less effected by the coming hike in taxes as it will most specifically affect the calculated mortgage interest. Getting a 3% mortgage rate could contribute to a huge savings in the coming years.
Key Takeaways:
- -So, although the mortgage interest is paid to the bank, for many landlords it will still attract tax as if it were income in their pocket.
- -This is the point at which landlords lose the ability to deduct their mortgage interest costs from their rental income before calculating their tax bill.
- -While the lower mortgage interest payments mean a landlord actually pays more tax, this is outweighed by the lower total costs, which could see a landlord make more than ten times their annual after-
“Remortgaging onto a lower rate could save a landlord from having their profits obliterated by tax changes effective from next year”