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Your Move Property Blog

Thoughts, Opinions & Analysis of the UK Property Market

What is tax deductible for landlords?

July 24, 2014 09:05 by YOUR MOVE

Nobody wants to pay any more tax than necessary so, as a landlord generating a return from your Buy to Let investment, it’s worthwhile spending some time looking at whether you’re fully minimising your taxable profits. In order to do that, you need to know what allowances are available to you and which of your outgoings are tax deductible.

It’s a great help if you use an accountant who either invests in property themselves or already has other landlords as clients.

They tend to know the rules and allowances inside out and can make sure you’re claiming your full entitlement.

To start with, you can deduct your ‘operating costs’, i.e. the expenses you incur managing and administering the let – things such as utility bills, buildings and liability insurance, cleaning and gardening costs, our fees as your letting agent; and then any direct costs, such as stationery, business phone calls and even books you buy about Buy to Let. And one of the biggest benefits is being able to deduct the interest you pay on your Buy to Let mortgage.

Then there are additional allowances you could be entitled to – check with your accountant. Two you might already be aware of are: the energy saving allowance, where, until April 2015, you can claim up to £1,500 per property in insulation costs; and the wear and tear or renewals allowance for replacing and repairing goods in furnished properties.

As a general rule of thumb, you can deduct any costs you legitimately incur in the business of renting out a property as a Buy to Let investment.

What you cannot deduct – at least not until you sell the property – is the cost of any improvements you make that increase the property’s capital value.

For example, you could deduct the cost of installing smoke detectors and fitting fire doors, because those are things that fall under your health & safety responsibilities as a landlord, but you couldn’t claim the cost of extending the kitchen. While you might argue that you’re simply making the accommodation more comfortable for your tenants, adding square footage to a property is most definitely considered a capital improvement.

And it’s not just what you do, but also the level to which you do it. If you fix faulty guttering, replace a broken downpipe or repair a blown double-glazing panel, that’s necessary maintenance, in order to keep the property safe and in good order for the tenants. However, if you choose to update all the guttering and fascias or replace basic double-glazed windows with high-quality wooden sealed units, those things can’t be claimed until you sell.

As and when you do sell, you should be able to deduct the cost of improvements from any capital gains, minimising that tax bill.

Tax is a complex matter and the difference between a capital improvement and maintenance is not always black and white, so it really is important that you have a well-informed and experienced property accountant. Staying on the right side of HMRC, while running your business as profitably as possible, is always what you should be aiming for as a Buy to Let landlord.

As a general rule of thumb, you can deduct any costs you legitimately incur in the business of renting out a property as a Buy to Let investment.

 

 




June 2014 House Price Index

July 23, 2014 16:20 by Your Move Press Office

 

 

House prices see highest annual rise in four years, but rate of growth slowing 

• Average house prices climb £23,443 or 9.6% in the past year – 5.2% excluding London and South East
• On a monthly basis, growth cools to 0.7% in June – dropping to 0.1% without London and South East
• London house prices up 15.6% annually, but prices falling in Westminster and the City
• First-time buyers strengthen recovery nationwide, with new peak prices set in South East and East Anglia

 Commentary

David Newnes, Director of Your Move estate agents, owned by LSL Property Services plc, comments: “Average house prices in England and Wales have climbed 9.6% in the year to June, the highest annual rise in house prices experienced since July 2010. Twelve months of solid house price increases have driven up average property values by a total of £23,443, setting a new record high of £268,637. But if you exclude London and the South East from the picture, average house prices across England and Wales have risen a far more sustainable 5.2% over the last year. There are also new signs that growth is beginning to slow as we move into summer, and following the changes brought about by the Mortgage Market Review implemented at the end of April. The 0.7% monthly change witnessed in June – amounting to £1,900 – is below the average 0.8% increase per month recorded over the last year, as house price inflation starts to moderate. And if you remove London and the South East from the equation, house prices are up only 0.1% in the month to June.

Read the full Index 




Landlord Legislation - Redress Scheme

July 23, 2014 13:56 by YOUR MOVE

The Government recently announced that all letting and property management agents will have to join an approved ‘redress scheme’ later this year.

While the majority of agents – including Your Move – already belong to an ombudsman, a startling 40% (3,000 agents) currently do not.

They will now have to join either The Property Ombudsman, Ombudsman Services Property or The Property Redress Scheme.

This gives all tenants and landlords the opportunity to complain to an independent third party if they feel they haven’t received a good service from their agent. It’s completely free of charge and if the complaint is upheld, compensation may be awarded.

Your Move was one of the founding members of The Property Ombudsman, so has already been part of this scheme for many years.

We hope this legislation will improve things for the tenants and landlords who use an agent that is not currently a member, but it’s going to take a while for thousands of letting agents to join and get used to the system.

As such, we always recommend landlords and tenants use agents that are members of ARLA or NALS, as both are members of an existing property ombudsman, are independently audited and offer what we consider to be essential insurance cover that protects all rents received by any branch.




Scotland House Price Infographic - May 2014

July 17, 2014 09:01 by YOUR MOVE
Scotland House Price Infographic - May 2014 - Your Move

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House Price Index Infographic - June 2014

July 11, 2014 08:25 by YOUR MOVE

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YOUR MOVE Blog

YOUR MOVE is a multi-award winning estate and letting agent with branches across England and Scotland

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