Property crowdfunding platform Property Partner has launched a buy-to-let calculator, which shows landlords the full impact of the cuts to their income as a result of the changes to mortgage tax relief being phased in from April 2017.
Hundreds of thousands of traditional buy-to-let landlords will see their rental income dramatically hit when the maximum amount of tax relief that can be claimed on mortgage interest, falls from the current 45% top level of tax to the basic rate (20%).
The tax changes are intended to create a level playing field between landlords and first-time buyers, and raise billions of pounds in extra revenue for the Treasury. However, property investors in the UK are already taxed more heavily than in Germany, France and the US, and experts say these additional hikes could trigger a significant shake-up, further restricting rental supply and leading to increased rents.
Property Partner has designed a calculator to help landlords work out the impact of the changes. They put into the calculator whether they are a basic rate taxpayer (20%), a higher rate taxpayer (40%) or an additional rate taxpayer (45%).
Landlords then tell the calculator how much they bought the property or properties for, their total annual rental income, how much is left on the mortgage, and finally what interest rate they are paying. The resulting personal forecast shows how much worse off higher rate taxpayers will be once the mortgage interest tax relief cuts are fully implemented.
Dan Gandesha, CEO of Property Partner, said: “Landlords were hit with a shock new tax in the summer budget when the chancellor announced that mortgage tax relief would be cut. Our buy-to-let calculator allows you to quickly and easily work out whether it’s still worth holding on to your property or not, and what other alternatives are available.”
Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.