Landlords hit by recent and forthcoming tax changes may wonder if it is better to buy a rental property through a limited company, rather than holding it personally. Holding it personally Where a property is held by an individual, the property income tax rules apply. The profits of the property rental business are charged to…
Countdown to restriction of letting relief and final period exemption
No capital gains tax liability arises if a gain occurs on the sale of a property which has been the owner’s only or main residence throughout the period of ownership then the gain is fully sheltered by private residence relief. However, there are advantages to be had if the property has been the only or…
Properties not let at a commercial rent
There may be a number of reasons why a property is occupied rent-free or let out at rent that is less than the commercial rate. This may often occur where the property is occupied by a family member in order to provide that person with a cheap home. For example, a parent may purchase a…
Allowable finance costs
Although the way in which landlords obtain relief for finance costs on residential properties is changing, there is no change to the type finance costs that are eligible for relief. What qualifies for relief The basic rule is that relief is available for expenses that are incurred wholly or exclusively for the purposes of the…
Legal and professional fees – Capital or revenue?
At some point, a landlord is likely to incur legal and professional fees in connection with the running of their property rental business. It is easy to fall into the trap of assuming that these costs can be computed in calculating taxable profits if they are incurred wholly and exclusively for the purposes of the…
Landlords: Dealing with finance costs correctly
The self-assessment deadline is looming. Self-assessment tax returns for the year to 5 April 2019 must be filed online by 31 January 2020 if a late filing penalty is to be avoided.Landlords will need to complete the property income pages. Particular care should be taken where the landlord has a loan or a mortgage as…
Using your car in your property rental business
Landlords will often use their car for the purposes of their property rental business. Where they do so, they are able to claim a deduction for the costs that they incur. Using mileage rates Where a landlord uses their car for business purposes, the easiest way to work out the amount that can be deducted…
Buying a property to let – the importance of keeping records from day one
For tax purposes, good record keeping is essential. Without complete and accurate records, it will not be possible to provide correct details of taxable income or to benefit from allowable deductions. Aside from the risk of paying more tax than is necessary, landlords who fail to take their record keeping obligations seriously may also find…
Curtailment of letting relief
Landlords have been hit with a number of tax hikes in recent years, and this trend shows no signs of abating. From 6 April 2020, lettings relief – a valuable capital gains tax relief which is available where a property which has at some point been the owner’s only or main residence is let out…
Non-residents landlord scheme
A non-resident landlord is a landlord who lets out property in the UK but spends more than six months in the tax year outside the UK. A special tax scheme – the non-residents landlord scheme – applies to these landlords. Under the scheme, tax must be deducted by a letting agent or tenant from the…