Property Partner has launched a buy-to-let calculator for landlords to work out the potential impact of the reduction in mortgage interest tax relief on their income.
The property crowdfunding platform has introduced the calculator ahead of the changes, which will be phased in from April 2017.
Thousands of buy-to-let landlords will see a significant dip in their rental income when the maximum level of tax relief that can be claimed on buy-to-let mortgage interest drops from the current rate of 45% to the basic rate of 20%.
The cut is designed to create a balance between landlords and first time buyers, as well as raising billions of pounds in revenue for the Treasury. However, landlords in the UK are already taxed much more heavily than those in Germany, France and the USA.
Experts believe that the reduction could cause serious changes in the private rental sector, further limiting the supply of rental accommodation and subsequently pushing rent prices higher.
The Property Partner calculator will help landlords understand the impact of the changes. Landlords put into the calculator whether they are a basic rate taxpayer (20%), a higher rate taxpayer (40%) or an additional rate taxpayer (45%).
They then put in how much their bought their property or properties for, their total rental income per year, how much is left on their mortgage(s) and what interest rate they are paying. The resulting prediction indicates how much more worse off higher rate taxpayers will be once the cuts are fully implemented.
CEO of Property Partner, Dan Gandesha, comments: “Landlords were hit with a shock new tax in the summer Budget when the Chancellor announced that mortgage tax relief would be cut.
“Our buy-to-let calculator allows you to quickly and easily work out whether it’s still worth holding onto your property or not, and what other alternatives are available.”1