If you're a landlord or property rental business owner looking to ensure that you’re paying the least possible tax then read on to see how you can maximise your efficiency.
What is deductible varies depending on whether your accounts are prepared using the cash (the default basis), or the accruals basis.
With the cash basis, you can deduct revenue expenses relating solely to renting the property and deduct certain capital expenses.
Under the accruals basis, you can deduct revenue expenses wholly and exclusively incurred for the purposes of your property rental business.
Here are 10 expenses you may be able to deduct from your rental property:
Letting agency fees: If you let your property through an agency, you can deduct the fees charged by the letting agency (usually a percentage of rental income).
Advertising costs: The costs for advertising your property to tenants can be deducted.
Cleaning costs: If you use a cleaner for in tenancy cleans, end of tenancy cleans, or to clean your office premises you can deduct associated costs.
Accountancy costs: the costs for an accountant or bookkeeper are allowable costs which can be deducted.
Gardening costs: If your property has a garden and you incur gardening costs, you can deduct these in calculating your taxable profits.
Travel expenses: Costs incurred wholly and exclusively for the rental business are deductible, including visiting the property to check it, visiting the tenants or undertaking maintenance.
Repairs: The cost of repairs to the property or the cost of fixtures and fittings can be deducted.
Replacing domestic items in a furnished property (except holiday lets): You can deduct the cost of replacement but not the cost of original items. This is capped at the cost of a like-for-like replacement.
Utilities and council tax : Where the costs of utilities, council tax or business rates are met by the landlord, they are allowable expenses e.g. in a holiday let.
Interest and finance costs: If you are a non-residential landlord, a corporate landlord or letting a furnished holiday let, then you can deduct interest and finance costs in calculating taxable profits. Residential landlords can’t deduct interest and finance costs, but relief is available for 20% of those costs.
Hopefully by reading this post you'll have gained a better understanding about business tax expenses that may be deductible as a landlord or owner of a property rental business so that you can start to ensure that you're saving as much tax as possible. Tax planning for business owners with multiple properties can be complex, with many nuances and a need for a full overview of your finances and any other businesses that you own.
We've found that this is one of the areas where a low cost or inexperienced accountant can end up costing you a lot of money due if they don't utilise all of your available deductions, or don't proactively plan to minimise your tax liability for the future and instead they simply complete your tax returns.
Get in touch with us at AW Accountants today for a no obligation consultation to see if we are the right fit to help you maximise your property rentals tax efficiency.
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