{"id":276,"date":"2018-09-10T15:53:52","date_gmt":"2018-09-10T15:53:52","guid":{"rendered":"https:\/\/www.idealflatmate.co.uk\/landlord-HQ\/?p=276"},"modified":"2018-10-08T09:34:59","modified_gmt":"2018-10-08T09:34:59","slug":"what-landlord-expenses-are-tax-deductible-in-the-uk","status":"publish","type":"post","link":"\/landlord-HQ\/what-landlord-expenses-are-tax-deductible-in-the-uk\/","title":{"rendered":"What landlord expenses are tax deductible in the UK?"},"content":{"rendered":"

No matter how you became a landlord, whether you\u2019re building a portfolio or fell in to it accidentally, keeping your books in order and knowing what to declare will make all the difference come the dreaded tax return.<\/p>\n

Nobody wants to think about tax, but as a landlord (even if you\u2019re just renting out a room) it\u2019s something you\u2019ll need to keep on top of. Luckily, the tax treatment of landlords is pretty generous, even after wide-ranging changes introduced in the last two years. By making sure you know what\u2019s tax deductible, you can help to make sure that you\u2019re not hit with an unfairly large bill.<\/p>\n

As a rule of thumb, any expense that you deduct against profit must be \u201cwholly and exclusively for the purposes of renting your property\u201d. But when that can cover everything from decoration and repairs to utility bills and management fees, how exactly do you identify what is and is not tax deductible as a landlord?<\/p>\n

\"What<\/p>\n

Landlord expenses that are NOT tax deductible<\/h2>\n

First, it\u2019s important to understand recent changes to landlord tax. In the past, landlords were able to offset their mortgage interest payments. This was seen as a key favourable treatment for the private rented sector. However, from 6 April 2017, basic rate taxpayers began to lose their relief on mortgage interest payments, along with the interest on any other property financing. The relief is being phased out gradually. For the 2018-19 tax year portion of mortgage interest payments that are tax deductible is 50%; in 2019-20 it will be reduced to 25%; and in 2020-21 the relief will be abolished altogether. This was a hugely controversial move, and has caused some landlords to talk about selling up. If you have a loan on your property, you should read the government guidance on tax relief for residential landlords, which includes some useful case studies.<\/p>\n

There are other costs that are not deductible, or which are offset in different ways. The general rule is that \u2018revenue expenses\u2019 are allowable deductions (provided they are wholly and exclusively for the purposes of renting the property), while capital expenditure is not. Revenue expenses relate to the day-to-day running of the property, while capital expenditure are used over a longer period of time – for example upgrades or additions to the property or its contents. However, you should still keep track of these expenses, as you may be able to offset them against a Capital Gains Tax bill if you sell your property in the future.<\/p>\n

\"\"<\/a><\/p>\n

Tax deductible expenses for landlords<\/h2>\n

And exhale. Got all that? Ok, now for expenses you can deduct against rental income.<\/p>\n

Cleaning, maintenance and repair<\/h3>\n

General maintenance and repair costs are tax deductible. However, you can\u2019t claim for improvements – only work to bring the property back to the standard it was in before.<\/p>\n

Bills<\/h3>\n

The full cost of bills \u2013 such as water rates, electricity, gas and council tax \u2013 are deductible, but only when they\u2019re being paid by the landlord.<\/p>\n

Insurance<\/h3>\n

The cost of your landlord insurance policy is also tax deductible. Read more about landlord insurance<\/a>.<\/p>\n

Services<\/h3>\n

Some properties require more upkeep than others. Fortunately the services of a gardener, cleaner, exterminator, or handyman can be deducted against income \u2013 so long as the landlord pays them directly and that work they undertake is for the benefit of the tenants.<\/p>\n

Letting agent and management fees<\/h3>\n

Finding a tenant isn\u2019t always easy, and finding the right one can be harder still – so many landlords choose to let their property through an agent. These fees are tax deductible, as are the fees incurred if you choose to have your property fully managed by an agent.<\/p>\n

Accountants\u2019 fees<\/h3>\n

And finally, one of the biggest decisions when it comes to your Self Assessment is whether to employ an accountant or do it yourself. While good accountants don\u2019t come cheap, their fees are at least tax deductible. The same goes for legal fees, provided that they relate either to lets of a year or less, or to the renewal of a property lease for less than 50 years.<\/p>\n

\"What<\/p>\n

What are \u2018part expenses\u2019?<\/h2>\n

It\u2019s possible that you\u2019ll incur a cost which is only partly related to the property rental, and which also benefits you personally. This is particularly common with properties in which only one room is rented, or which are lived in by the landlord for part of the year. In these cases, you need to work out what portion of the cost is related to the rental income – so, for example, if you live in the property six months of the year, you could claim 50% of the otherwise allowable costs.<\/p>\n

As with all tax and legal matters, it\u2019s important that you seek professional advice if you\u2019re in any doubt. A qualified accountant can help you make sense of landlord tax, and a good one will pay for themselves very quickly.<\/p>\n","protected":false},"excerpt":{"rendered":"

No matter how you became a landlord, whether you\u2019re building a portfolio or fell in to it accidentally, keeping your books in order and knowing what to declare will make all the difference come the dreaded tax return. Nobody wants to think about tax, but as a landlord (even if you\u2019re just renting out a … <\/p>\n

Continue reading “What landlord expenses are tax deductible in the UK?”<\/span><\/a><\/p>\n

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