As a landlord, maximising the return from your property should never be far from your mind, so it’s important to know exactly what expenses you can claim tax relief against.
Changes to tax regulations for landlords were announced in the recent Budget delivered by George Osborne, making it more important than ever for you to claim tax relief where possible.
We have taken a look at five key areas where you could be able to claim tax relief in order to drive down your overall tax burden.
• Mortgage fees
If you are taking out a mortgage to fund a new buy-to-let property, you are likely to pay an arrangement fee to your lender and possibly a broker fee too. These charges are tax deductible in the year you set up the mortgage.
• Letting agent fees
Using a letting agent can help you to achieve the maximum rent for your property and ensure a quality tenant is in place at all times. What’s more, the fee charged by your agent is tax deductible so do not forget to declare it.
• Building and contents insurance
You will need to secure a specialist building insurance policy for landlords, and it is also advisable to have contents insurance. The cost of these can also be claimed back against the taxman.
• Maintenance and repairs
From time to time, you will inevitably have to spend money on maintaining your tenanted property. Repairs are also likely should an accident occur or bad weather strike, which could also lead to costly work being carried out. In such scenarios, any money spent on keeping your property in good condition is tax deductible. However, be wary that some work may be considered an improvement to your property, and while this is deductible against the eventual sale price, it cannot be offset against rental profits.
• Ground rent and service charges
If you own a property on a leasehold basis, it is common for you to pay ground rent to the freeholder. And if you own a flat within a block, a service charge will typically apply. These costs can be tax deductible, along with money paid for services such as gardening.
For more information on reducing your tax liability or making most of a rental property, please contact your local Leaders branch.