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<\/p>\nHave you been considering becoming a Buy to Let landlord but don\u2019t know whether its worth the investment? If so, you might want to read on\u2026<\/p>\n
Since 2016, there has been a stamp duty surcharge on second homes and Buy to Let properties in England, Wales and Northern Ireland.<\/p>\n
This means that anyone who owns an existing property and chooses to buy another for \u00a340,000 or more is now subjected to an additional 3% SDLT. In a nutshell, if you own another property, you\u2019re charged for it.<\/p>\n
As of 2021, an additional 2% SDLT (on top of the aforementioned 3% surcharge) has been added for overseas buyers purchasing additional properties in the UK, even if this is their first UK property purchase (with their other property being overseas).<\/p>\n
Since April 2017, a new plan has been phased in wherein mortgage interest tax relief for individual landlords is being restricted by the government.<\/p>\n
As of April 2020, landlords can no longer deduct mortgage expenses from their rental income to reduce their tax bill. Instead, they receive a tax-credit, based on 20% of their mortgage interest payments. This is far less than the previous system for higher rate taxpayers, wherein landlords effectively received 40% tax relief on their mortgage payments.<\/p>\n
Previously, landlords received a wear and tear allowance (a type of tax relief). This was 10% of the \u201crelevant rental amount,\u201d and acted as a flat rate allowance, claimable every year regardless of the actual expenditure of new furnishings.<\/p>\n
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As of April 2016, this has been replaced by a renewals allowance, wherein landlords of residential properties can only be granted tax relief on the costs they actually pay for replacing furnishings, appliances and kitchenware.<\/p>\n
CGT is a tax on the profit when you sell off an asset that has increased in value.<\/p>\n
April 2016 saw the rate of CGT reduced for all chargeable gains except in relation to those on the disposal (selling) of residential property.<\/p>\n
This means if you were to dispose of shares or mutual funds, you would be taxed at 10% or 20%, whilst if you were to dispose of residential property, you would face CGT of 18% or 28%.<\/p>\n
Landlords used to get up to \u00a340,000 per owner if the property was rented out for part of, but not all of, the period of ownership. However, this is now only available if the owner has been living there with the tenant, meaning lettings relief has effectively been abolished.<\/p>\n
Final years relief is an exemption from CGT. It used to be granted during the last 36 months of ownership, regardless of whether the owner had occupied the property or not during this time.<\/p>\n
As of April 2016, this period of relief from CGT has been reduced to 9 months, making it just a quarter of what it used to be.<\/p>\n
As of June 2020, all landlords must get the electrical installations in their properties inspected and tested at least once every five years. If their tenants or the local authorities request it, they must be able to provide a copy of the electrical safety report.<\/p>\n
This is great for keeping tenants safe, but it is one of many things that Buy to Let landlords will have to stay on top of and pay for.<\/p>\n
Buy to Let property is intrinsically reliant on tenants. You have to find tenants in order to get an income, and you will still be incurring costs regardless of whether the property is empty or not.<\/p>\n
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Have you been considering becoming a Buy to Let landlord but don\u2019t know whether its worth the investment? If so, you might want to read on\u2026 Changes in Stamp Duty Land Tax (SDLT) Since 2016, there has been a stamp duty surcharge on second homes and Buy to Let properties in England, Wales and Northern […]<\/p>\n","protected":false},"author":7,"featured_media":641,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false},"categories":[1],"tags":[108,112,113,120,60,41,24,28,109,118,107,111,119,114,115,116,110,117],"yoast_head":"\n