Remember the new rules introduced by "Boy George Osborne - the then Chancellor of the Exchequer" in Finance Act 2015, where landlords that are higher rate tax payers will have restricted tax relief on mortgage interest.

The restriction was phased in gradually as follows:

• 2017-18: The mortgage interest deduction for Landlords was restricted to 75%, with the remaining 25% being eligible for relief at the basic rate
2018-19: 50% mortgage interest deduction and 50% restricted to basic rate of 20%
• 2019-20: 25% mortgage interest deduction and 75% restricted to basic rate
• 2020-21: all mortgage interest for landlords will be restricted to basic rate tax

A large number of landlords will be affected but many are still burying their heads in the sand about the impact on their cash flow, and have done little about this, hoping that house values will continue to rise if they are forced to sell.

Well what happens if there is a property crash or correction?

One common thought is to incorporate the properties into a limited company.

There are a lot of issues to be considered here with potential Capital Gains and Stamp Duty liabilities, and landlords need to take advice, because it is possible there might be ways of avoiding these costs

Mike Ogilvie - mo@obcaccountants.com