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As a landlord your income is the rent you receive. It can also cover any other payments received from tenants for services which have been provided by the landlord – these included:

  • Any repairs being made to the property
  • Cleaning of communal areas
  • Any utility bills which includes hot water, heating etc.

If you charge tenants non-refundable deposits for renting out your property this will also count as rental income. If you retain any part of a returnable deposit at the end of the tenancy then this would also be treated as income.

Expenses a landlord can claim back

When it comes to running and maintaining your property, landlords can claim back certain expenses. If the rent you charge includes services for instance council tax or water, you will have to count the rent you charge the tenant within your income, you will be able to claim the costs you pay as an expense.

Here are some types of expensive you can subtract:

  • Direct costs like phone calls, advertising (new tenants), stationery
  • Service charges, rents and ground rents
  • Legal/ accountant/ letting agent fees
  • Water rates, gas & electricity and council tax

Restriction on tax relief

As of 6th April 2017, the amount of income tax relief landlords can claim back on residential property finance costs have been restricted to the basic rate of tax.

Click here to find out your additional tax for 2019

For example, if your property still has a mortgage, the interest you paid on your mortgage could be claimed back as an allowable expense. If you are a higher rate tax payer (40%) this would mean you would get 40% tax relief. However, from the 2017/18 tax year only 75% of the interest qualifies for tax relief at the higher rate of 40%. Over the next three years the will be reduced by 25% each tax year until we reach 6th April 2020 when landlords when only basic rate tax relief (20%)will only be available, even if you are a higher rate taxpayer…

Do I need to report a loss?

If HMRC say so, yes. If HMRC request you send in a tax return, you will need to give details of your rental income and any expenses even if you made a loss within that tax year.

GoSimpleTax is an advanced tax calculator, built to simplify what you’re able to claim, and submit your Self Assessment tax return directly to HMRC. All the essentials of landlord expenses are included within it, and the cloud-based software offers tailored tips and guidance as you go. Try this 14-day free trial to find out what a mobile solution can do for your business.

Find out more about the Upad Landlord Club


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By Sandra Mpouma
06 Jul 2018

Categories: Tax, Property Management, SimpleTax



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