PROPERTY: What can you claim against your rental income?

With owning a rental property certain expenses can be claimed against the rental income to reduce your tax bill.

Including, but are not limited to:
  • Accountancy fees
  • Agent’s fees
  • Bank charges and interest
  • Insurance
  • Legal & professional fees
  • Light and heat
  • Mortgage interest
  • Rates
  • Repairs and maintenance

Capital v Expenditure

It is often difficult to ascertain whether an expense is considered “capital” or “expenditure”. Expenditure costs are incurred for the day-to-day running of the property and are deductible from the business income, gaining 100% tax relief. Capital costs, however, relate to improvements of an asset, i.e. the property or new items of furnishings or equipment. They can also receive tax relief but via a “capital allowance” instead. It is particularly tricky when it comes to Repairs and Maintenance where many factors need to be taken into account and professional advice is required on anything other than the absolutely obvious. HMRC do have a toolkit – it’s lengthy, but holds the information required to differentiate if a cost is considered “capital” or “expenditure”. Figurit can help you determine the nature of the expense accurately and attracting the most tax relief available.

Duality of purpose

Another point to note is that even if an expense has been paid from your rental property bank account, there is a chance that it won’t be allowable if the expense has a dual purpose, being part for the property and part for personal use. For a cost to be allowable, strictly, it needs to be wholly and exclusively for the benefit of the rental property and a necessary expense. Figurit help many doctors and dentists with rental property tax questions. Whether you are a new landlord or have been managing your property portfolio for a while now, contact the team to discuss maximising your property tax position, call: 020 7376 9333  

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