Landlords Mortgage Interest

A. There is a common misconception amongst landlords that if your mortgage repayments are equal or more than your rental income then you will have no tax to pay. While you may spend all of the rental income servicing your mortgage you could still have a taxable profit.

Firstly, it is the mortgage interest element of your repayments only that is an allowable deduction.

Secondly, it is only a certain percentage of this mortgage interest charge that is allowable. In 2017 it was 80% and in 2018 it is 85% of the mortgage interest charged for the year. The mortgage interest deduction is due to rise by 5% per year until 2021 when the full 100% deduction will be available to landlords.

Where you let your property to tenants on a Social Housing Scheme e.g. HAP Scheme then there is a possibility of getting 100% mortgage interest relief subject to certain conditions being met.

Date published 11 May 2018

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.