Being A Landlord Can Be Taxing – Maximise The Profit From Your Investment
3 minute read
If you are a landlord then you are running a business, even if you just have the one property, which means you need to ensure that you are maximising the profit you are receiving from your investment. A lot of this can be done through selecting the right buy to let mortgage and letting agent, if that’s the way that you decide to go, but what can you do when it comes to tax time? Well quite a lot actually, as with all businesses, it pays to understand what expenses are tax deductible when you are a landlord.
The team at Just have put together a list of tax deductible costs that we hope all you landlords out there find useful:
With your buy to let mortgage, any broker and arrangement fees are tax deductible. You will need to claim this back in the tax return for the year the mortgage was arranged.
Each year when you submit your tax return you can list the interest that you paid on your buy to let mortgage that year as a tax deductible expense. If your mortgage is interest only then the entire amount you paid during that tax year will be deductible.
Property marketing and associated fees
As will any business, there will be marketing costs. If you decide to manage the entire letting process yourself then you will be able to deduct any costs associated with marketing, drawing up tenancy agreements, credit checking and applying for references for prospective tenants; deposit protection etc…
If you decide to appoint a letting agent to manage things for you, you will be able to apply their fees to your list of tax deductible costs.
As a landlord you will need insurance, building only, or building and contents for properties that have been let full or part furnished. The premiums from these insurance policies are tax deductible.
As the landlord of a residential property you are responsible for the maintenance of that property. Any money spent on property repairs and maintenance (general wear and tear rather than renovations or extensions) can be added as a tax deductible expense.
Ground rent and service fees
If your rental property is leasehold rather than freehold then that means there will be fees that are payable to the freeholder. These fees can vary and could be ground rent only or ground rent and services fees which are used to maintain the common areas of the property, such a hallways, stairs, lifts, etc… All of these fees are tax deductible.