Buy-to-let tax allowances

It's almost here.

No...I'm not talking about Christmas.  For most landlords the big day is the 31st of January when you have to make your self assessment tax return including the profits or losses from your rental business.

Firstly, it's a common mistake that you can off set losses you make in your rental business against your PAYE tax liabilities.  You rental profits and losses are assessed separately and can be carried forward to future years.  Here are the main costs that you can claim as expenses against your rental income when submitting your tax return. Remember it is possible to use the Property Manager software to record all your expenses and produce your fully worked through return that can be emailed to your accountant or used to fill out your tax return.  The main allowable tax expenses are as follows:

Interest on buy-to-let mortgage payments

The biggest expense by far for most landlords are the mortgage payment. Remember though that it is only the interest, not any capital repayments that are tax deductible.

Running a letting business
Running a letting business is like running any other business in that the expenses associated with doing this are deductible against your profits.  Things like the cost of travel to and from your letting properties, costs of telephone calls and even those of running a home office can be all offset against your profits.  Where you need to be careful is apportioning the costs so you need to be clear on this concept before working out the figures.

Repair costs
The costs of maintenance on your buy-to-let property is an allowable expense.  However, adding new facilities or improvements are not.  This can of course be quite a grey area.  For instance until very recently replacing wooden windows with UPVc windows was classed as an improvement and therefore not allowable.
 
Professional fees
There are a number of professional fees that a landlord can off set against their rental profits: Letting agent fees, accountant and legal fees being amongst them.

Landlord insurance
All landlords should be insured.  Make sure that the full cost of you landlord insurance
is deducted from your rental profits.  Some landlords take out rental insurance and again this are also off settable.

Expenses of holding property
Most local taxes and utility costs are normally borne by your tenant.  However, during voids the landlord is liable for costs such as council tax payments and the utility bills.  These can all be claimed as a legitimate expense.

Here are some recent articles about saving tax:

Tax saving advice
Tax saving guides
10 Ways to save tax

Landlord insurance - discounted professional rates