Landlord expenses – a quick guide to some of the more common expenses you should include in your tax return, some of which are particular to landlords. You could be wasting significant money when renting our your property if you are missing these allowable expenses.
As a landlord, you probably already know the government is removing the ability to include your buy to let mortgage as a business expense. If you are in a position where this will affect you, I recommend you contact us and discuss the solutions we have available for you.
If your property is used solely for rental, with no private use, you should be able to apply most deductions below. If you property is also partly, either by time or floor-space, used by yourself, you need to apply deductions proportionately.
Tax Relief On Domestic Items
From April 2016, if a domestic item within your furnished rental property requires replacement, you should be able to claim tax relief for the item(s). It is important to realise this only applies to replacement of an existing item, not the initial purchase.
HMRC define “domestic items” as beds, freestanding wardrobes, floor coverings such as carpet, curtains and linens. Electrical items such as TV’s, freestanding cookers, fridges, freezers, dish-washers, washing machines, tumble dryers. You should also be able to receive tax relief on plates, cups, saucers, and cutlery. This list is an example, we could not find an extensive list produced by HMRC.
As a final word on replacements, they should be as close to like for like as possible, and not a significant improvement. Replacing a 32″ TV with a 66″ TV is not a reasonable replacement, and you should only claim tax relief on the cost of the 32″ replacement, even if you purchase the larger model.
Tax relief on domestic items does not apply to fully furnished holiday lets and “rent a room” schemes.
Ongoing & Operating Costs
Utilities : your water rates , council tax, gas, heating oil, and electricity can be deducted.
General repairs to the building and maintenance, such as guttering, windows, doors etc; as with domestic items, any replacement items must be of similar specification, not an upgrade.
Maintenance wages, such as cleaners, gardeners, security.
Administration and marketing, including letting fees, advertising, phone costs directly associated with acquiring new tenants.
Insurance costs including buildings, contents and public liability.
Legal fees where the tenancy lasts a maximum of a year, and renewals for less than a fifty year term.
Vehicle running costs incurred while servicing your rental business.