Tax Tips for Landlords
Any property other than your family home will be subject to capital gains tax when you sell, assuming that you make a profit on the sale.
Property Tax
Our team of tax specialists can advise you on all aspects of property tax, whether you are a landlord, own a property overseas, a second home here in the UK, or you rent out rooms in your house. Our expertise means we can manage your tax affairs to ensure that you pay the minimum amount of tax required.
Ask us about our services for
- Landlords
- Overseas Property Purchases
- People renting out rooms in their own homes
- Second home owners in the UK
Any property other than your family home will be subject to capital gains tax when you sell, assuming that you make a profit on the sale. This is the case whether you rent out the second property or keep it for your own use.
There are ways to reduce or, in certain circumstances eliminate, this tax charge. We can advise you further on the criteria required, and the advantages and disadvantages of making this election if you are interested.
Tax Tips for Landlords
If you rent out property you will pay income tax on the difference between the rents you have charged in a tax year, less any allowable expenses and charges.
Allowable expenses include:
Repairs – If you pay to maintain your property in its existing condition, you can claim for the expenditure incurred. However if you improve the specification of the property, say replace kitchen units with a more expensive design, then the Revenue may try and argue that the expenditure is an improvement. The cost of improving your property can be claimed against any capital gains tax when you sell, but will not be allowed as a deduction for income tax.
Mortgage or loan interest – You can claim for all the interest charged, but not the capital element of the loan repayments or the up-front costs of securing the loan.
Furniture replacement – If you let a property furnished the Revenue will allow you to make a deduction for the depreciation and replacement of furniture. There are two ways in which you can do this.
a) A 10% deduction – a figure calculated as 10% of gross rents receivable (after deducting council tax and water rates, if paid by the landlord), or:
b) The actual cost of replacing the furniture, but not the initial cost of installing the furniture in the property.
You need to make up your mind about which way to claim when you first let a property, and it will apply for the entire period of your ownership. It usually works out more tax efficient to claim the 10% wear and tear allowance.
UK Holiday Homes
If you rent property that qualifies as furnished holiday lettings, that is to say it is let for at least 70 days, but not more than 140 days in any one tax year, you will qualify for certain additional tax benefits. Unlike residential and commercial lettings, furnished holiday lets have trading principles applied to them. This means you are able to take advantage of favourable relief’s for any loss you make on renting the property AND on any profit you make when sold.
Renting Rooms
If you let rooms in your own house, you will not pay tax if the total rents charged are under £4,250 per tax year.
We can provide you with advice regarding all tax aspects of buying, selling and letting property. We have only included a few areas for you to consider on this web page. If you are about to invest in, dispose of, or let property do give us a call.
Overseas Property
We can also advise you on overseas property purchases. Whether you are looking to buy a property as a second home or for investment income, we can advise you on issues such as:
- the best method of buying
- your tax obligations
- how to minimise capital gains and income tax
- foreign currency
- insurances
