Change to taxation of Landlords

Adapting to
the Changes
Continued...
We have illustrated the implications of
these changes to the taxation of
landlords.
Let’s now take a look at some of the
options that are available for landlords to
adapt:
1. Deleveraging the Portfolio:
First, the most obvious “solution”. Many
commentators have touted the
deleveraging of property portfolios (i.e.
selling properties and using the
proceeds to repay mortgages) to be the
obvious solution for the worst hit
landlords. However, the difficulties
associated with this approach are often
overlooked.
Highly leveraged portfolios typically arise
from regular refinancing, the cash from
which is spent on growing the portfolio
further.
Where this has occurred over a number
of years of ownership and capital growth,
there may be insufficient equity – after
lending has been repaid – to meet the
costs associated with the disposal.
We now consider an example of the
implications of a sale of a highly
leveraged property.