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Buy-to-let tax changes will kill pensioners' nest eggs

Saturday 23 April 2016

Pensioners are ready to offload their second homes because of the pending mortgage interest relief proposals, it has been claimed.

A poll by Responsible Equity Release found that 40 per cent are considering selling up their buy-to-let homes because they fear it will hit their profits. 

Despite this, of the 1,000 pensioners asked, 70 per cent felt they would struggle to stay financially solvent without their extra property.

Meanwhile, more than 90 per cent of those asked said they were concerned by George Osborne's plans for the mortgage interest relief.

Phased in from next year, the amount landlords will be able to claim will be set at the basic tax rate of 20 per cent, compared to the monthly interest payments of top-level tax they pay set at 40 per cent.

As a result, thousands could see their earnings recede, and this comes on top of Osborne's recently-introduced 3 per cent hike in stamp duty tax, which is already forcing some buy-to-let homeowners to re-think their investments.

Buy-to-let income outperformed pensions 

Managing director of Responsible Equity Release, Steve Wilkie, said: "For many pensioners, having a buy-to-let property has been a life saver in this low-interest environment.

"While their savings have languished, earning very little interest, and pension income has been hit hard by falling share prices, property income has remained strong.

"Without the income boost from their buy-to-let, many would really be struggling to make ends meet.

"George Osborne was so focused on taxing the rich, he forgot that a new tax on buy-to-let won’t just hit the wealthy, it will also hit those honest, hard working people, who may have a single buy-to-let property, and were just hoping it would earn them a little extra income in retirement."

Despite the concerns, investing in supplementary homes is still financially lucrative, especially compared to ISAs, stocks and shares and even pensions.

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