Running a property portfolio is no different to running any other business. Your operating expenses can be offset against taxable income, so it is sensible to keep a note of any expenses you incur on your buy to let properties. The government is trying its hardest to reduce the number of items you can use to offset tax but there are still several items you can claim for when you submit a tax return.
By 2020, landlords will no longer be able to claim mortgage interest tax relief. For some landlords, this means buy to let property will not be viable, so check your figures to make sure you are not one of them.
Letting Agent Fees
Are you using a letting agent to market your properties? If so, don’t forget to offset the cost against your taxable income. Most letting agents charge anywhere from 10%-15% of a landlord’s monthly rental income, so this is a significant cost.
If you elect not to use a letting agent, any costs you bear from marketing your properties are tax deductible. These can include newspaper ads, online property website ads and any other relevant costs.
The start of a tenancy means extra costs for landlords. Credit referencing, inventory charges, drawing up a tenancy agreement and protecting a deposit are all tax deductible.
Day-to-Day Admin Expenses
The everyday direct costs of running a buy to let business are tax deductible. These include paper, postage, printer ink, telephone calls related to the business and any...
mileage you clock up travelling between rental properties.
It is sensible to take out insurance on buy to let properties. This will cover you in the event your tenant causes damage. You are also protected if your tenant decides to sue you when they trip over a loose paving stone outside the front door.
The costs of maintaining rental property can used to offset tax. You can’t claim for a new kitchen, but you can claim for the cost of painting the property when a tenant moves out.
By Amer SiddiqLandlordZONE® Forums