I've looked around a bit but can't find a lot of discussion on this topic - the phasing out of interest relief on residential investment property. Currently this relief is at 75% and from discussions, a lot of people feel that this will be gradually reduced to zero.
What are people's views - will this be phased out? If so over what period? I think that this is going to have a drastic impact on many people who happen to have one/two investment properties. The revenue are changing the whole rules and the entire landscape!
As someone who lives in a 2 bed apartment with my partner and a 12 month old, we also have one small apartment which we rent out (approx 12k in rent a month). Both apartments are heavily in negative equity. We're not rich, we're not greedy, we have no spare disposable income as the mortgage payments even now are very high. We're stuck.
Over the next couple of years our we could go from not paying tax on this apartment to having to pay another 6k (12k rental x 50% marginal rate- simplified calc - omits small expenses).
We seem to be in a huge bind. We can't move as we cannot sell as we are in negative equity. We can't move out and rent our old apartment as our income assessable for tax will rise by say another 15k. Our ADDITIONAL tax bill could rise to approx 13k a year. That's above water rates, property taxes, reduction in child benefit etc. (that's not to mention that we would lose our tracker rate on our ppr).
Now I'm sure I'm not the only one in this situation - has anyone else done the sums here? I think its a time bomb waiting to happen for many small investors. Who has that kind of money to pay the tax man?
I am interested to hear people's views.
What are people's views - will this be phased out? If so over what period? I think that this is going to have a drastic impact on many people who happen to have one/two investment properties. The revenue are changing the whole rules and the entire landscape!
As someone who lives in a 2 bed apartment with my partner and a 12 month old, we also have one small apartment which we rent out (approx 12k in rent a month). Both apartments are heavily in negative equity. We're not rich, we're not greedy, we have no spare disposable income as the mortgage payments even now are very high. We're stuck.
Over the next couple of years our we could go from not paying tax on this apartment to having to pay another 6k (12k rental x 50% marginal rate- simplified calc - omits small expenses).
We seem to be in a huge bind. We can't move as we cannot sell as we are in negative equity. We can't move out and rent our old apartment as our income assessable for tax will rise by say another 15k. Our ADDITIONAL tax bill could rise to approx 13k a year. That's above water rates, property taxes, reduction in child benefit etc. (that's not to mention that we would lose our tracker rate on our ppr).
Now I'm sure I'm not the only one in this situation - has anyone else done the sums here? I think its a time bomb waiting to happen for many small investors. Who has that kind of money to pay the tax man?
I am interested to hear people's views.