Tax deduction tips for landlords 

Tax deduction tips for landlords 

The more properties you own, the more taxes you’ll pay. And, with changes to the Buy to Let tax relief, your tax debt will only increase. To reduce your tax, you need to learn about the tax deduction tips for landlords.

A tax deduction is when you make an ‘expense’ claim against your taxable income, to reduce your annual tax bill. For example, if your annual rental income is £20,000, you will be taxed on this full amount. But, if you claim £5,000 of expenses, your taxable income reduces from £20,000 to £15,000. This means you pay less tax.

Tax deduction tips: What are the expenses you can claim?

Below are expenses you can claim as a tax deduction for your investment property:

  1. Mortgage interest repayments
  2. Maintenance repairs, such as fixing flooring, windows and doors; repainting; replacing tiles; leaks; etc.
  3. Fees paid to tradesmen for repair work
  4. Personal content, such as furniture and electrical appliances, provided to your tenants, are subjected to wear and tear. Thus, your content is tax deductible.
  5. Travel costs to and from your rental property. Remember, if your property is abroad, you can claim part of your international airfares.
  6. If you manage your investment property from a home office, part of your home office costs can be claimed as a tax deduction.
  7. Property management fees
  8. Accounting fees
  9. Fees for marketing your property
  10. Water bill
  11. If you are a leaseholder, the ground rent paid to your freeholder is tax-deductible.

Keep all your receipts for the taxman

Don’t forget, you must keep all the receipts, for every expense you claim, for at least five years. The taxman can audit your records at any time. Failure to provide a receipt or evidence of purchase could result in a fine.

Should you hire an accountant?

This is a subjective topic; there is no right or wrong answer. I believe you should always use the skills of an expert to fill in your knowledge gap. If you are not an accounting expert, hire an accountant.

Property taxation rules also differ in each country. I own properties in Australia and the UK. I pay less tax in each country because I have both a UK accountant and an Australian accountant. Local accountants know the legal loopholes to maximise your tax deductions, and their accounting fees are tax-deductible.

So, do you know of other tax deduction tips for landlords?

Sign up for weekly property investment tips

Be the first to comment

Leave a Reply

Your email address will not be published.