Tax allowance loss begins to bite

Most landlords will know only to well that the loss of tax allowance benefits has started to take effect. To minimise any lost profitability landlords could adopt three ideas listed below. One solution, of course, may be to increase rents so that the extra cost is passed on to tenants - but this solution is far from ideal. Most tenants are already paying as much as they can afford, and you risk pricing yourself out of the market. However, if you think you will be affected, there are a few other things you can try.

1) You could switch your mortgage to a fixed rate deal to get lower rate of interest, please remember this is not always best advice and it’s recommended to seek professional advice.

2) You could place your property portfolio in a limited company structure. You would then pay corporation tax (which is lower) rather than income tax on your profits.

3) If your spouse pays a lower rate of tax, you could transfer ownership of one or more properties to them (taking care this does not lift them into a higher tax band).

As with most clouds, there is a silver lining. If you’re a landlord with a lower income, you’re no longer at such a disadvantage to those in the big league. This level playing field may in fact help the wave of “silver landlords” hoping to use their pension pots to buy rental property.

If you are looking for a buy-to-let new or re-mortgage, please do make contact and one of our fully qualified advisers will be happy to assist.