Do you own a property and let it out? If so, changes to tax regulations coming into force next year may affect you. Our Money & Allowances Specialist Laura Lewin outlines the new rules…
ANYONE who owns a property and rents it out has to pay tax on the rental income. However, you can currently deduct certain costs before working out your tax bill, such as agent’s fees, maintenance and repairs.
Under existing regulations, you can also include the interest portion of your mortgage payment, but new rules being phased in from January 2017 mean you will no longer be able to offset this.
Tax will be applied to the rental income you receive, rather than what is left after your mortgage has been paid. The changes will be implemented gradually to come into full force by 2020/21.
AFF is concerned that this will have serious implications for some of you, wiping out profit you may rely on or, more worryingly, leaving some of you in debt.
Many of you own a home and either have to move into SFA on posting to be able to stay together as a family, or have bought a property ready for when your soldier leaves the Army.
“This new rule is likely to have a big impact on us,” said Army family member Gary Firth.
“Offsetting the mortgage interest currently keeps us below the tax threshold.
“We make no profit at all from the rent we charge. We’re currently posted 150 miles away, so there’s no way we can live in the house unless we choose ‘married unaccompanied’.
“If we sell, we have to start again on the housing market in a few years. Surely this rule goes against the MOD encouraging soldiers to plan for the future.”
AFF feels that Army families will be unfairly disadvantaged by the new rules.
Chief Exec Sara Baade said: “Some families are ‘accidental landlords’ due to the nature of Service life and these changes would result in an unfair penalty on families who need to move to meet Service needs.”
We are lobbying for an exemption for Service families who own only one property and would like to hear if you will be affected. Contact Laura at firstname.lastname@example.org or, for more information, go to www.aff.org.uk or search for ‘rental income’ at www.gov.uk