Property investors, landlords - are you claiming all your expenses?

Here are some tips that I published in my last newsletter that I thought may be useful.

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Some investors or landlords may not be aware of some of the expenses and allowances they can deduct from the taxable rental income. Ensuring that you offset all your legitimate costs will help minimise your tax bill.

Some of the expenses that can be offset against rental income are:

• Finance charges: any interest paid on the loan/mortgage taken out to purchase a rental or buy-to-let property is tax deductible, as is interest on any secured or unsecured loans taken out to obtain the property or to finance repairs.
  
  
• Legal & professional fees: if you use the services of accountants and letting agents, their fees are tax deductible.Legal expenses associated with preparing tenancy contracts and dealing with tenant disputes are also tax deductible. However legal expenses associated with purchasing property cannot be offset against rental income (these expenses are offset against your capital gains tax liability when you sell the property).
  
  
• Council Tax, electricity, water & gas: if all rooms are rented out, all the usual running costs are fully tax deductible, assuming that none of the tenants makes a contribution to the bills. If you let your property exclusive of all the bills, then you cannot claim.Between tenancies the landlord is responsible for paying council tax and utility charges, which are tax deductible.
  
  
• Insurance: buildings insurance, contents insurance, rental guarantee, as well as maintenance insurance policies for gas boilers, plumbing cover and white goods are also tax deductible.
  
  
• Ground rent & service charges: on a leasehold property there is usually a ground rent and a service charge to pay to the freeholder; these are deductible.
  
  
• Marketing and advertising costs: any costs associated with finding tenants or selling your property are tax deductible. Other tax deductible costs include expenses such as setting up a website or having some “to let” boards made up.
  
  
• Managing / letting agent fees: if you use agents to let and/or manage your property, their fees are tax deductible.
  
  
• Cleaning between tenancies
  
  
• Garden maintenance
  
  
• Wear and tear: if you let furnished accommodation, you can claim 10% of the gross rental income (minus rents, rates, council tax, water rates).
  
  
• Administration expenses: any stationary, office and administration expenses such as telephone, all paper and envelopes, printing, postage, office consumable and any other costs incurred in connection with running your property business are fully tax deductible.
  
  

I would like to clarify that I am not a tax expert. Please check with an accountant or Tax Office if there are issues that are particular to your personal and property circumstances.

Laurent Stadelmann
Managing Director - Chez-Vous HomeSearch