If you are a sole trader landlord, you may recently have had a wake-up call due to something known as Section 24. But what exactly is it?
Well, Section 24 of the Finance (No.2) Act 2015 – which received Royal Assent on 18 November 2015 – will start to apply from the 2017-18 tax year and, in graduating stages up to 2020-21, will reduce a landlord’s ability to offset mortgage interest costs against rental profits before calculating the amount of tax payable to the Government.
It essentially means you will be taxed on your income, not your actual profit.
This may push you into a higher rate tax bracket, and it may even see you paying tax on a loss. It certainly will impact you if you are highly leveraged with mortgage finance. And that’s why the Residential Landlords Association believes that 1 in 4 landlords will exit from their BTL investments.
If you serve notice on your tenant, then you may be left trying to sell an empty property with no income from rent while you are awaiting the sale to complete. This also means paying council tax on the empty property, increased insurance premiums, standing utilities, and having your prize asset exposed to additional risk of damage.
However, the alternative, which is to sell a property with sitting tenants in situ, has its own challenges. The tenant may not be amenable to viewings – and they are not obliged to allow viewings anyway. The tenant may not have kept the property clean and tidy either, which can affect a buyer’s impression during viewing.
So what’s the answer? As Section 24 impacts, more and more landlords will be selling, and fewer will be buying
If you sell your property to us, there is no need to serve notice on the tenant, and no need to worry about having an empty property. You can successfully swerve the implications of Section 24, and free up capital to use elsewhere.
Our simple service takes away all the stresses associated with this change in law, and we’ll take care of absolutely everything – which means you can get on with enjoying your life instead.
We typically pay around 85% of the market value (the added advantage being your capital gains tax liability may be reduced), and we can complete in a timeframe to suit you. It’s that straightforward.Ask us for a no-obligation cash offer today