The Grapevine Late Summer 2019 Grapevine Aug-Sep 2019 v2 | Page 23

Negotiating the Mortgage Interest Relief Maze A mid the ongoing debate surrounding Brexit, it’s easy to overlook changes to tax legislation that could, quite literally, be on your doorstep. Rules relating to mortgage interest relief for individuals who own rental properties fall into that category. From April 2020 mortgage interest on buy to let properties will only qualify for ‘basic rate’ tax relief. This rule change has been phased in over four years and the tax year starting April 2020 is the last of the four phasing years. These changes, which affect high rate taxpayers have resulted in a many property investors to consider establishing limited companies to house their property portfolios as a way to bypass these changes and get ‘full tax relief ’ on mortgage interest. Another looming change is the partial withdrawal of lettings relief from April 2020. The current rules exempt a proportion of any gain made if you sell a residential rental property that you have previously lived in. Under the new rules you will only qualify for the relief if you continue to occupy the property in addition to a tenant. The loss of this relief can be quite substantial in some cases. Finally, HMRC have proposed a change to ‘Principle Private Residence’ relief (PPR). Where a property has previously been occupied as a main residence this relief currently exempts from tax the last 18 months of ownership. The proposal is to reduce this relief to just nine months. The last two changes mentioned above could have a big impact on the amount of tax that you paid if you were to sell a rental property that you previously lived in AFTER April 2020. If you’re concerned about how these changes could affect you, please get in touch. You’ll also find lots of useful information about tax legislation in relation to property – both your own home and buy to let – Call 01905 612347 for your FREE taxes Made Easy 2019/20 guide. Worcester tel: [phone] email: [email protected] Evesham tel: [phone] email [email protected] Tewkesbury tel: [phone] email [email protected] www.hwca.com/accountants-worcester We help business owners to BUILD A MORE VALUABLE BUSINESS Short to medium-term growth and profitability is essential, but do they ensure you maximise the long-term value of your business? Haines Watts can help you look at your business in a different way and support you in building value. To find out more contact Haines Watts, your local award winning accountants Suite 1A, Shire Business Park, Wainwright Rd, Worcester, WR4 9FA - 01905 612347 [email protected] Vale Business Centre, 9 Abbey Lane Court, Evesham, WR11 4BY - 01386 579999 [email protected] www.hwca.com The Grapevine 23