Landlords are classed as business owners for tax purposes and will no doubt be keen to ensure that they are claiming for all allowable business costs against their rental income. Although there are subtle differences between costs available to a general trading business and a property business, the expenses you claim against your property income will need to follow the usual HMRC ruling that the costs must be incurred exclusively for the purpose of renting out the property.
As set out in this example from the gov.uk site, if you buy a new vacuum cleaner for your own home and also use it to clean your rental property between tenancies, you cannot claim the cost of the vacuum cleaner. However, if you buy cleaning products specifically for cleaning the rental property, these are fully-claimable.
Where costs are incurred partly for your rental business and partly for another purpose you may be able to claim a proportion of that cost if that part can be separately identified as being incurred wholly and exclusively for the purposes of the rental business.
Did you know that both letting fees and management fees can be claimed as expenses?
Examples of expenses you can claim include:
- Mortgage interest – a proportion of this cost is now limited to basic rate Income Tax Relief.
- General maintenance and repairs to the property, but not improvements (such as replacing an old laminate kitchen workshop with a shiny new granite one).
- Insurance, such as landlords’ policies for buildings, contents and public liability.
- Costs of services, including the wages of any gardeners and cleaners.
- Letting agent fees and management fees.
- Accountants’ fees.
- Direct costs such as phone calls, stationery and advertising for new tenants.
- Vehicle running costs (only the proportion used directly for your rental property business) including mileage rate deductions.
Examples of expenses you cannot claim a tax deduction for include:
- The full amount of your mortgage payment – only the interest element of your mortgage payment can be offset against your income
- Personal expenses – you cannot claim for any expense that was not incurred solely for your property rental business.
Daisy Property are able to provide our managed landlords with a comprehensive year-end report for tax purposes, detailing your income and expenditure in relation to your tenanted property. This includes all charges for letting, management, and any maintenance costs obtained through our contractors, making the end of year process much simpler for you to manage.
With letting and management fees fully-claimable as an expense, what have you got to lose?
Give our friendly team a call today 01622 813854 or get in touch via email: firstname.lastname@example.org