By Louise Misiewicz
Article relevant to the tax year 2017/18
Are you reducing your property portfolio in 2018 given the legislative and tax changes?
I was reviewing industry news last night and came across an article discussing how research highlights how a considerable number of property landlords are considering reducing their portfolios in 2018. The research, from industry organisation the National Landlords Association (NLA), states that 20% of property investors / landlords surveyed are looking to cut down their property portfolio in the next 12 months.
The main reasons have been cited for this high number of buy-to-let landlords in the UK thinking about dropping their properties because of Section 24, which limits mortgage interest relief as we written previously in anther article. New licensing requirements are all adding up to place greater potential burdens on the profitability of property portfolios across the country.
I haven’t seen a slowdown in the maintenance and growth of property investment in 2018 from my landlord clients, but a more cautious property investment sector could see slight changes this year.
The majority of landlords I’m working with are planning on maintaining existing portfolios, but many others are looking to sell buy-to-let property to simplify their tax liabilities from 2018.
Other property investors are reviewing the UK market and looking at new and upcoming buy-to-let locations in the North, where the market is proving more resilient to recent changes in the sector.
I also advise my buy-to-let landlord investors to consider other tax-efficient options, such as running their property portfolios through Limited Companies, with around 70% of all new mortgage applications now coming from Limited Companies in the UK as opposed to individual property investors.This tax mitigation strategy also enables property landlords to claim tax relief on mortgage interest, therefore bypassing the Section 24 legislation.
Download our tax-efficient property investment guide for 2018 here
Tax planning will become more and more important to buy-to-let landlords leading up to January 2019 when they need to pay tax bills up to the end of April 2018. There could then be less of a tax offset available on their rental incomes than was available before, and it will become more difficult for many investors.
I always advise that seeking out professional property tax advice from a financial expert is the first and best way forward, and my team of property tax experts are on hand to best advise our clients on how to reduce tax liability whilst also increasing the return on investment from buy-to-let property investment in the UK.
I’ve written a number of related articles which will provide useful background reading, including:
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