Maison Estates Ltd

LANDLORDS minimise your TAX BILL!

Sep 1, 2013   //   by mecadmin   //   blog, Uncategorized  //  No Comments

Whether you are a landlord with a single property or an established one with a portfolio, either way you will benefit from knowing how you may minimise your tax bill by claiming allowable expenses.

What expenses can you claim against your property income? Expenses fall into two categories:

1) Revenue – these expenses can be deducted from your rental income for tax purposes assuming they are incurred wholly and exclusively for the purpose of the rental business and are not of a capital nature. (See below for examples of allowable expenses).
2) Capital – these expenses are only taken into account for tax purposes when you sell the property. Such expenditure includes the original cost of the land and property and any improvements and alterations.

It is not always straightforward determining whether a particular cost is revenue or capital but as you can save significant amounts of tax if big cost items are categorised as revenue, it is worth considering whether the costs can be justified as revenue.

How should you hold a rental property?
There are many different structures one can use which include:
- Sole ownership
- Limited company
- Partnership
- Limited liability partnership

You should choose your structure carefully when you set up your rental business because organising the most tax efficient structure can save you significant amounts of tax. You should also review your structure regularly, as circumstances and tax rules change.

Examples of revenue expenditure normally allowable for tax:
Estate/Letting agents fees
Accountancy fees for preparing rental business accounts
Advertising and marketing costs
Bank charges
Cleaning
Gardening
Energy Performance, gas and electricity safety certificates
Ground rent
Insurance on buildings and contents
Insurance claim expenses
Insurance for loss of rent
Interest charges on loans used to improve or build properties (subject to conditions)
Legal fees
Maintenance charges
Mortgage interest charges
Rent collection charges
Repairs not providing a significant improvement to the property.
Telephone calls made in relation to the property
Travel costs where the travel is solely for the purpose of the rental business
Water rates.

We meet many landlords who are unaware of the above and consequently end up paying a higher level of tax.  Please note the aforementioned list isn’t exhaustive and it is highly recommended you seek professional advice from an accountant, tax specialist or even the HMRC to learn of all tax implications of being a landlord and how you may structure your finances in a tax efficient way.

HAVE A PROPERTY TO RENT?
CALL: 02476 711164 or 07970 005007
View us at www.maisonestatescoventry.co.uk

 

Maison
15 Allesley Old Road CoventryCV58BU UK 
 • 01442 233 345

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