Property tax advice should be left to experts to avoid mis-selling
Anyone buying or selling a property needs to be aware of the tax implications, but proper tax advice should always come from the right sources.
Speakers at a recent event in London, the Financial Services Expo, have highlighted the need for brokers, intermediaries and lenders to guard themselves against the next “mis-selling scandal” by making it clear that they do not offer tax advice to borrowers and buyers, instead pointing them towards specialist advisers to answer their questions.
Such brokers should offer documentation stating this fact, according to Louisa Sedgwick of Vida Homeloans who spoke on a panel on the topic, in order to avoid the risk of getting into trouble down the line.
Buy-to-let taxes are changing
For landlords and buy-to-let property investors, tax is a hot topic at the moment as mortgage interest tax relief changes – Section 24 – are already affecting many in the industry. However, it seems that some landlords, particularly those who are less experienced, are still not fully up to speed with how the changes will impact them.
David Whittaker, chief executive of Keystone Property Finance, said: “Lots of landlords remain blind to exactly what is going on. They are aware there is a problem but don’t know how to quantify it yet. And when most of them do their tax returns most of them are going to get a wake-up call.”
The changes mean that the amount of tax relief landlords and investors can claim against their mortgage payments is reducing every year until 2020; this year landlords will be able to claim 50% of their mortgage tax relief. In the 2019/20 financial year, this will reduce to 25%, before the introduction of the new tax credit in April 2020 when they will no longer be able to deduct any mortgage expenses from rental income.
Get the right advice
Many in the buy-to-let and property investment industry will naturally be asking lots of questions to find out how the changes are likely to affect their bottom lines, and will be seeking clarification when it comes to filling in their tax returns, but it is important to seek this information from the correct source.
Adrian Maloney, sales director of OneSavings Bank, commented: “Make sure that your clients are getting the right tax advice and that you, as an adviser, are almost isolating yourself to the mortgage advice.
“Tax advice should only be done by someone who knows the process inside and out.”
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