Investors warned to balance mortgage and rental income

Professionals who are investing in property should ensure that their mortgage payments are similar to the amount of rental income they receive in order to ensure they pay less tax, according to Bestinvest.

The firm has said that people who are looking to pay as little tax as possible should take the biggest mortgage they can but make sure the rental income covers the mortgage payment.

Peter O''Donovan, mortgage manager of Bestinvest, said: "They can then offset the mortgage payments and just pay tax on the profit they make, so obviously the higher the mortgage payment and the closer to the rental income, the less tax they pay."

He added that hopefully someone else will be paying the investor''s mortgage and they will be paying less tax and "in the meantime the property value hopefully increases".

Research from the Council of Mortgage Lenders has recently revealed that the number of loans to buy-to-let landlords in the second half of last year was 179,100 compared to 171,800 in the first half of the year.

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