Buy To Let Tips

Tax Tips

Don’t forget if you carry out administration of your let properties at home then you can claim part/whole of the household bills that are directly linked to the administration of the let property. The bills often claimed are linked to utilities such as telephone, electric, gas, council tax and home insurance. It would be easier to calculate the amount to be offset against tax if you have a dedicated room within your home i.e. if the square footage of the room was a certain % of the overall square footage (ignoring kitchens and bathrooms). You could then simply apply the % against each utility bill.

Gaining knowledge for your business via seminars, magazine subscriptions and books are all tax deductible as long as they do not relate to new areas of expertise.

Mortgage interest can be offset against the rental income when calculating out your tax liability. It does not matter which property the mortgage is secured on as long as you can demonstrate that the monies derived from mortgage funds are used to purchase the property. On this basis you can see that if you raise money on a property after purchasing the property you could not offset the deriving mortgage interest on the purchased property.

On a similar note, don’t buy a property with your savings if you intend to eventually take out a mortgage on the property. You may well save time by paying cash for a property but you will be hit with a higher tax bill year after year!

If you are moving home and letting out your current home then be sure to raise the biggest mortgage on the property to be let and arrange the buy to let mortgage before you let it. The aim is to offset the maximum amount interest against the rental income in order to minimise your tax liability from your buy to let properties.

All too often landlords forget to claim travelling expenses for searching, viewing and managing their own let properties. Running a car can be expensive so every trip should be considered when working out any tax liability.

The 10% of the gross rent Wear and Tear allowance is a tax break that shouldn’t be forgotten. If you let your property fully furnished then 10% of your gross rent will be deducted prior to calculating your tax liability.

Unless the property is a holiday let you can apply losses from one property to another i.e. if one let property is making a profit and another let property isn’t making a profit then you can aggregate the two properties to establish a net tax liability. You can also carry losses from one year to the next.