A recent report has shown that a third of those over 45 living in London are concerned that they will never pay off their mortgages. Of those surveyed, 32 per cent said they weren't sure they would own their properties outright, that's compared to 17 per cent of over-45s across the UK. Further findings showed that 59 per cent of over-45s in London consider their home to be part of their retirement planning, with 46 per cent across the UK viewing their property wealth as part of their retirement income.
What’s more, individuals who receive rental income from letting their properties are about to see major changes in the way their rental income is taxed. From April 2017, landlords will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive a basic rate reduction from their income tax liability for their finance costs. This measure will restrict relief for finance costs on residential properties to the basic rate of income tax.
If you are a landlord with properties with significant mortgages or loans, you may soon see a major increase in the amount of income tax you are expected to pay. It is therefore essential that you consider your options now. The use of a corporate vehicle for additions to a letting portfolio should certainly be considered.
Please contact Alan Ford or your usual Beavis Morgan Partner if you would like to explore your planning options in more detail.
If required, our partner business BM Structured Finance is also able to assist with sourcing the right funding solutions tailored to your individual situation. Contact Simon Belton for a free initial consultation.