Paying tax is an annual and stressful chore for landlords whether it’s stamp duty or income, capital gains or corporation tax.
By revealing some simple tax tips, we hope to help landlords remain stress-free and as safe as possible from paying too much tax and losing valuable spare time.
Our financial chief and property tax expert, Shahbaz Husain, provides five tips to help ensure you stay on top of your taxes.
Every journey starts somewhere and this one starts with the basics of keeping correct and complete records.
If your records are in disarray, you are more likely to miss something, the most common of which are home office costs and mileage reclaims.
A property accountant can help you set up systems to ensure that you’re not missing a penny of eligible costs. It’s always good to have an extra set of eyes, especially when dealing with things as important as your income.
Mortgage interest tax calculations have changed in recent years and many landlords are looking to incorporate their portfolios.
But trading through a limited company is not a panacea that will automatically lead to a lower tax bill.
Whether you benefit from this will depend upon a number of factors, including how long you plan to own each rental property, so get your accountant to work out if this is a viable option for you going forward.
Taking time to sit and assess situations properly and really weigh out their benefit for you personally is essential. Professional landlords have the most to gain here, but this can work well for smaller landlords, too.
Capital allowances are a complex area of taxation that are often ignored by landlords. They aim to give tax relief for the reduction in value of certain assets. They cannot be claimed on your bog-standard buy-to-let, though there are circumstances where your property may qualify, such as HMOs and other multi-lets alongside holiday lets and other types of commercial property.
If you can claim, you could benefit from Annual Investment Allowance, writing down allowance, super-deduction or structures and buildings allowance.
Grants of up to £5,000 were announced in Rishi Sunak’s October Budget Statement and will become available from April 2022 for the replacement of gas boilers with heat pumps.
Air source heat pumps typically cost between £6,000 and £18,000 (depending on size) and this grant forms part of the Governments strategy to achieve net zero carbon emissions by 2050.
Other ways to reduce stress
Whilst not a tax tip in the strictest sense, it is important to ensure you use an accountant that specialises in property.
Ideally, this would be someone that has investment properties themselves, so that they understand the commercial aspects as well as taxation.
Knowing your way around your taxes is integral to staying on top of your property business. But it’s always useful to have a helping hand. Clooper is a huge boon to the landlord looking to cut back on wasted time and money.
Clooper’s developers have worked hard to bring helpful tools to their platform, that any landlord can use.
One is our tenant matching service. After you list your property, Clooper automatically advertises your property portfolio on other major property portals, including Zoopla, Rightmove and Prime Location.
This means that you can sit back and relax while the prospective tenants come to you, and you can choose which you contact to find your perfect match.
It can be easy to get sucked into overspending to advertise on multiple platforms, and in multiple different ways.
With Clooper this is minimised substantially, and you only pay a relatively small fixed fee to get your property professionally advertised and matched to local tenants.
Another added benefit for Clooper users is that tenants are already there on the platform. They’re there waiting for properties, which you can provide.
Instead of wasting time searching through other sites and keeping a manual track of leads for properties, Clooper keeps it all neatly in one place.
Most importantly, you’re still at the helm. You control who you connect with, how your property is described, and who exactly you’re renting to. Clooper merely makes it all that much easier, and significantly less stressful.
With everything in one place, you’re at less risk on missing out on essential information going missing, void periods extending for longer than necessary, and overspending on unnecessary costs.
Sign up for Clooper today and see first-hand how they could help you save precious time and money.
This article does not constitute financial advice. Any reader must take formal advice from a property accountant/tax specialist.