Property sector again the proverbial political football

[Nicholas Wallwork]

While the Chancellor of the Exchequer George Osborne received much praise across the press for his budget speech earlier this week, there is anger within the property industry. In a move which many believe will decimate the buy to let market going forward, the Chancellor announced a cut in mortgage interest payment tax relief from [...]

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[Barny]

I'm generally quite good with tax and numbers but this is still confusing me and I'm trying to work out how this will affect my income.

Is there anyone who understands it all and can either explain it in simple terms or supply a link to anything that does as I'm sure I may not be the only one!

For purposes of any examples and using easy numbers:

If my rental income is £1500 / month and my mortgage (interest only rates) are £1000 / month, I 'make' £500 / month before deducting the normal agent, insurance, accounting fees, etc. So, assuming these fee's are £100 / month, I'm then left with £400 / month which I'm taxed on.

With the above figures in mind, how will the new mortgage interest payment tax relief reducing to 20% impact this figure?

Does it mean that whereas currently I can deduct my full interest only mortgage of £1000 / month, with the 20% figure coming in, does that mean I can only deduct 20% which is £200 in my example and therefore I will have to pay tax on the remaining £800, plus the other £400 meaning I will now pay tax on £1200 instead of £400 / month?

Many thanks in advance