It has been a good 12 months for landlords – particularly those paying the higher rate of income tax – as an attempt to challenge the new tax increase fails.
The legal challenge led by Cherie Booth called for a judicial review of the new rules which are seen as unfairly penalising landlords.
The new tax rules will be introduced from 2017 and will add thousands of pounds to the tax bills of those on higher incomes who fall in to higher rate tax bands if they purchase properties with a mortgage.
The new tax rules will not affect those purchasing properties with cash leading to many in the industry complaining that it is an unfair tax.
Those already paying a higher rate of income tax could previously claim an allowance based on that rate on mortgage interest. The new rules mean that tax relief will now be 20% across the board.
The new rules will almost certainly make investing in property less appealing for many investors and this could lead to rents being pushed higher as a result.
If you are concerned about what the new tax rules mean for you, contact us.