Landlords and Tax
Tue 21 Feb 2017
Landlords have many different areas to consider when renting a property and one of the most important is the tax implications of their property investment. As with much of the rental market this area has also seen some important recent changes. The rules have changed in relation to the tax that landlords pay and can claim back.
Stamp Duty Land Tax (SDLT)
Since 1st April 2016 landlords purchasing an additional property (that is not their main home) above £40000 must pay an extra 3% stamp duty above the current Stamp Duty Land Tax residential rates.
Restriction of allowable allowances
Tax relief for finance costs such as mortgage interest incurred on the property that a landlord is letting out will be restricted to the basic rate of income tax (20%) by 2020. It is being phased in gradually from 2017.
Change to the wear and tear allowance
Since April 2016 the wear and tear allowance for fully furnished properties was replaced by a relief based on the cost of a like for like or nearest modern equivalent plus any cost incurred in disposing of the item.
Capital Gains Tax
A landlord is likely to have to pay capital gains tax on any profit they make when selling their investment property. The rate has changed during the last few years and the current rate applicable is 28% on gains made on the sale of the property.
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