How landlords are getting round new buy to let taxes

Many landlords are using limited companies to offset new tax changes


With 2 new taxes about to hit landlords many people have predicted that landlords would sell property and leave the buy to let market and thus start house prices to drop.

However the Council for Mortgage Lenders has reported mortgage lending for buy to let loans was up 35% in November compared to the previous year. This is being fueled by cheap buy to let loans and the rush to beat the 3% stamp duty increase on additional properties which would at an extra £7,500 cost to buying a £250,000 property.

It has also been reported that there has been an increase in buy to let loans to limited companies from 15% to more than 30% to help reduce tax liabilities.

Recent changes restrict the ability for landlords to deduct interest payments from income and those paying tax in the 40% bracket will be impacted the most with many seeing tax bills tripling by 2017. However, using a limited company may provide a loop hole for landlords allowing them to claim interest as a business expense but then incur corporation tax on profits.

There are also changes when landlords sell their properties with regards to capital gains tax. Currently capital gains tax is paid at the end of the tax year. From April 2019 capital gains tax will need to be paid 30 days after the property sale.

With major tax changes hitting landlords it is essential landlords review their options before making decisions.

Find out how to save property tax with this popular recently updated guide

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Written by: Houseladder