Section 24: Issues - Impact - Solution.
>1.4 million landlords are not aware of Section 24 and its implications!
Issues:
Mortgage Interest Rate Relief Reduction
1. Taxed on Turnover Not Profit.
2. Many Pushed to Higher Rate Tax 40%
3. Relief Only Available at 20%
3% Additional Dwelling Stamp Duty
1. Applies to Residential Property
2. Three Exceptions
a) Purchase price under £40k
b) Six or more properties in a linked transaction.
c) If Not Residential Property.
Impact:
George Osborne unveiled a shock tax change in 2015 which will remove landlords’ ability to deduct the cost of their mortgage interest from their rental income when they calculate a profit on which to pay tax.
In effect, the Chancellor wants to tax landlords on their turnover rather than profit, meaning that tax will be payable on nonexistent income. For some, tax rates will exceed 100pc: landlords will have to pay all of their profit in tax, and then pay more tax still. The tax increase will be phased in from 2017 and fully implemented by 2020.
Full Article & Tax Calculator: