For many individuals, buy to let looks like an attractive income investment option. However if you are considering investing in to property, it is important to do some research first. Chancellor George Osborne’s announcements last year have changed some things for the market.
In the Summer Budget, Osborne announced his plans to cut tax relief on mortgage interest to just 20%. Secondly, in the Autumn Statement he unveiled plans to hike stamp duty by 3%, payable when buying a property to let.
What does this mean?
The 3% stamp duty hike will take affect from April 2016. This means that any individual buying an additional property will pay the standard rate of stamp duty, plus an added 3%.
The move, intended to free up houses for buyers, will have a new starting threshold of £40,000, affecting nearly all those buying to let. The changes will increase the stamp duty tax on a £250,000 buy to let purchase from £2,500 to £10,000. The changes also apply to property being purchased as a second home.
The government is proposing an exemption for those who own 15 properties, whose investment may be boosting the nation’s housing numbers.
The more significant change is the tax relief on mortgage interest, which will start being phased in from 2017. Currently, investors receive tax relief that allows them to offset the interest on their mortgage repayments, against their income tax bills, on the rent they receive.
However, from April 2017 only basic rate tax relief will be received on mortgage interest, leaving higher rate tax payers to fund the difference.
If you would like more information about how this will affect you, or to talk through your options, please visit: www.contractormortgagesuk.com/partner/gorilla or call 01489 555 080.
Here at Gorilla, we provide a premium accountancy package for the monthly cost of £85 + VAT, the package has been specifically designed for on the go Contractors and Freelancers based in the UK. It includes unlimited access to FreeAgent’s cloud accounting online software and your own dedicated accountant who will provide you with unlimited support. If you’re interested, give us a call direct on 0330 024 0406.
