Buy-to-let investors can 'save tax'

Date: 28th February 2008

Professionals in the buy-to-let market can limit the amount of tax they pay on rental income by taking out larger mortgages.

Mortgage manager at Bestinvest Peter O'Donovan claims investors should take out the largest mortgage they can and offset payments with the income they receive from the property.

"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 explained.

Mr O'Donovan claims that this method of buy-to-let investing will allow landlords to pay their mortgage with rental income and pay little tax - while the value of the property "hopefully increases".

According to the Council of Mortgage Lenders (CML) says the number of buy-to-let investors in the UK is on the increase - with lending amounting to £24.1 billion during the second half of 2007.