How many tax allowances do you think you can claim from owning a rental property? The truth might pleasantly surprise you.
Being a landlord is a business, but from our experience, not every landlord knows what they’re entitled to. As well as the obvious costs like mortgages and maintenance, there are many smaller expenses that can soon add up and make a real difference to your bottom line.
Believe it or not, HMRC wants you to claim and even accepts digital copies of receipts to make it easier. Simply take photos of your paper receipts and put them in a folder on your phone, then keep any digital receipts in an email folder. This streamlines the job of retrieving them later on.
So, just what can you claim? Well, there are five main areas of allowable expenses, and we cover them all in this week’s blog. We’ll guide you through everything you can claim so that, instead of leaving wasted money on the table, you keep more in your pocket.
Keeping your property up-to-date and in good condition is how to attract and retain the best tenants. But more than that, looking after your investment is highly tax-efficient with plenty of expenses you can claim back, including:
Any expenses you claim must be for maintaining and repairing your property, rather than updating it. Improvements are only tax deductible when they are incidental to a repair, like swapping a broken single-glazed window for a double-glazed unit, or replacing worn-out old-fashioned appliances.
Adequate insurance cover is essential to protect your investment property against any unexpected damage or loss. Every landlord should have the following five types of cover: some are included in other policies, and all are allowable expenses.
Insurance might feel unnecessary, but it provides peace of mind and cover for when the unexpected hits, which it will do at some point. Ask an independent insurance broker to scour the market for the best deal, and then remember to claim back all the costs on your tax return!
There’s a surprising amount of allowable expenses for the general running of your rental property. These costs can really add up over time, and you’re entitled to claim back all of the following:
These expenses must be wholly and exclusively related to your rental property. If part of the expense is for something else, you need to apportion the cost. As an example, if you drove to IKEA and bought a light fitting for your rental property and another for your home, you could claim 50% of what you spend on petrol.
There are various services that make it simpler, easier and far less time-consuming to get the most out of your rental property. The good news is that the costs of all the following industry professionals are fully tax deductible.
While every landlord should maximise their tax efficiency and profits, remember that a truly passive income comes from valuing your time as much as the rent you receive. The more time you have, the more you can live a life you love.
The way landlords can deduct their mortgage payments from their taxable income has changed relatively recently, so here’s an outline of what you can claim, along with a useful loophole.
These changes make it all the more important to stay on top of available mortgage deals in case you have a fixed rate coming to an end. By staying one step ahead, you can seamlessly switch to a new deal without moving to a more expensive variable rate.
Are you claiming all your allowable expenses?
If you’re a landlord in the Wilton & Salisbury area, we’d love to help you improve the performance and profit of your rental property. Whether you’re looking to attract high-earning professionals, maximise your income or claim back everything you can, it’s what we do all day.
Call us on 01722 580059 or email us at info@piccoloproperty.co.uk for a friendly chat with one of our team.
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