Allowable expenses have changed over the years, with the government restricting some financial deductions like mortgage interest in section 24 tax charges. So if you’re a landlord renting out your property, you should either have your accountants and tax consultants figure out all deductible expenses or know them yourself.
Office Costs
Office costs or costs associated with managing property, like phone, broadband, and office equipment, are allowable. However, it’s important to note that only the portion a landlord uses for the rental business is deductible.
Travel Costs
Landlords can claim some travel costs that involve managing and running the property. Any petrol, insurance, and vehicle repair for property management are allowable. For example, if a landlord uses 10% of the vehicle fuel to get to and from the property, they can claim that 10% cost but only that amount. You can’t claim private or regular travel.
Repair and Maintenance Costs
Repairs and maintenance costs are allowable expenses. The fair repairs include fixing water leaks, heating and cooling problems, broken windows, and more. Landlords can also claim the costs for the annual gas safety certificate and the electrical condition report against the tax.
Property-Related Costs
There are several costs that owners need to pay when they own or run a buy-to-let property. These costs include ground rents, council taxes, and utility bills. If the landlord is responsible for the costs, then they will be allowable. However, if the tenant is responsible for paying the costs, landlords can only claim the costs for the period the property was empty.
Marketing Costs
Once a landlord is ready to rent their property, they need to do a lot of marketing. Marketing the property during vacancies and costs like letting agents, photography, creating virtual tours, and running paid advertisements are all allowable expenses.
Fees to Professionals
A rental business isn’t merely buying a property and finding tenants. Landlords must work with multiple professionals to ensure everything happens legally and the property is ready for rent. They’ll incur common expenses such as bookkeeping, accountancy, and interior design. These expenses are also allowable. Other professionals such as solicitors, debt collectors, or other necessary legal service is also an allowable expense. Keyword being necessary. Work to improve the property is not allowable, but anything classed as a repair can be.
Insurance Costs
For buy-to-let expenses, insurance costs like building and content insurance, vehicle insurance, etc., are allowable expenses. However, it’s best to get a tax accountant consultation for insurance cost deductibles.
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Allowable expenses can help reduce tax payables, but with so many disallowable expenses, it can be difficult to navigate. IBISS & CO. chartered tax advisers and accountants can help! We understand the complex processes and stay on top of the constant changes in tax policies. Our accountants and tax specialists will interpret and help you understand tax laws and expenses you can or cannot claim.
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