Welcome, savvy landlords! We all know that being a landlord is more than just collecting rent checks. It's an investment, a responsibility, and yes, sometimes a headache too, especially when it comes to sorting out your taxes. But what if we told you there's a silver lining to this tax cloud?
Yes, you've heard it right! When it comes to taxes, it's not all about paying out; you can also claim back. There are a bunch of expenses you might not even realise can be deducted from your rental income to reduce your tax bill. From property repairs to legal fees and even your landlord insurance, there are numerous avenues to ensure you keep more money in your pocket and less in the taxman's.
Our aim on this page is to help you navigate this often-overlooked area, breaking down the jargon into simple language we can all understand. Let's dive into the world of tax deductions for landlords together and uncover the ways you can maximise your rental property profits. Ready to become a tax-savvy landlord? Let's go!
Mortgage Interest: In the past, landlords could deduct their entire mortgage interest payment from their rental income before calculating their tax liability. However, in 2017, the UK government began to phase in restrictions on this relief. As of the 2020-2021 tax year, landlords can no longer deduct any of their mortgage interest payment directly from their rental income. Instead, they receive a tax credit, based on 20% of their mortgage interest payments. So this still need to be recorded.
Repairs and Maintenance: Any cost incurred to keep your rental property in good shape - like painting, plumbing work, or fixing a broken window - is tax-deductible.
Insurance: Your landlord insurance premiums, including coverage for property damage, liability, and loss of rental income, can be written off against your tax bill.
Property Management Fees: If you hire a property manager to handle daily operations, their fees can be deducted.
Professional Services: Any fees paid to professionals like accountants, lawyers, or real estate agents are deductible.
Travel Expenses: The costs of traveling to and from your rental property for management or maintenance are tax-deductible.
Advertising: Any costs associated with advertising your rental property can be deducted.
Council Tax and Utility Bills: If you're responsible for paying these, they are deductible from your rental income.
Cleaning and Gardening: The costs of hiring cleaners or gardeners for your rental property are tax-deductible.
Home Office Expenses: If you use part of your home for managing your rental business, you can deduct a portion of your home expenses.
Pest Control: Any pest control services hired for your rental property can be written off.
Safety Compliance: Costs for ensuring your property meets safety standards, such as installing smoke alarms or safety inspections, can be deducted.
Service Charges: Service charges on leasehold properties, like ground rent or service charge, are tax-deductible.
Stationery and Phone Bills: A portion of your stationery and phone bills related to your rental business can be deducted.
Renewal Fees: If you renew a lease with existing tenants, the associated fees can be deducted.
Cost of Eviction: Any legal costs associated with evicting a tenant can be written off.
Landlord Software: If you use software or online services for managing your properties, the cost can be deducted.
Educational Resources: Books, courses, or seminars about being a landlord or managing rental properties can be written off.
Remember, understanding what expenses you can claim as a landlord is a powerful tool in maximising your profits. Landlords and property investors, keep your eye on the prize: lower taxes, higher returns!
Consult a tax professional to ensure you're capitalising on all your eligible deductions and staying within the guidelines of tax laws.