Tax Benefits For Rental Property Owners

As a Landlord why would you want to pay more than required for your utility bills and numerous expenses when you’re renting your property.

The reality is that millions of Landlords do actually pay more taxes on their income received from renting property than is required.

The reality is that the property market provides more tax benefits than virtually any other investment.

The question you need to ask yourself as a landlord, am I claiming all the tax benefits as a rental property owner that I’m entitled to!?

In some cases the benefits available are the difference between making a loss, or earning an income on your rental properties. Here are the top ten tax benefits rental property owners need to know.

1. Repairs

An example of repairs which qualify are, replacing essential broken items, such as any broken windows, gutters, fixing leaks or flooring, and even repainting. As long as these repairs are completely necessary they can be deducted in the year they are incurred.

2. Interest

When looking at tax benefits for rental property owners, interest is quite possibly the single biggest deductible expense. Deductions can be made for mortgage interest, if a credit card has been used for any goods or services during periods of rent inactivity. Additionally, if any loans are in place to acquire or improve the rental property, you can claim for these as well.

3. Depreciation

During the first year when payments are being made for an apartment, house, or any other rental property, these costs are not fully deductible, but instead the tax benefits available to rental property owners are in the depreciation of the property, which involves deducting a proportion of the property over several years.

4. Working From Home

When a landlord has a workshop, or any other home workspace being used to run a rental business, these expenses can also be partially deducted. This applies whether the property being utilized is owned or rented.

5. Employees and Contractors

This deduction only applies as a tax benefit to rental property owners when anyone is hired to perform services associated to the rental activity. It can be for an employee, in which case the wage expense can be deducted, or for any independent contractors.

6. Damage and Theft

In the event any of the rental properties are damaged or destroyed by a flood or fire, there may be a case for tax benefit deductions.

If your rental property is damaged or destroyed from a sudden event like a fire or flood, you may be able to obtain a tax deduction for all or part of your loss.

7. Local Travel

Landlords including any travel expenses due to dealing with their rental activity, have to meet the criteria of dealing with tenant issues, purchasing goods to fix repairs etc, these can be included in your deductions.

8. Long Distance Travel

A carefully planned trip mean that landlords are able to mix business with pleasure, and still have deductible tax expenses. Airfare, meals, hotel bills, overnight stays, if these are associated to any rental inactivity, then they can all be included.

9. Insurance

This covers any employee’s, as the cost of their health insurance can be included. Additionally, any amounts paid for virtually all insurance costs can be deducted as a tax benefit for rental activity, including the usual fire, theft, and flood insurance.

10. Legal and Professional Services

Any charges incurred for lawyers, accountants, property management companies, investment advisors, or other related professional fees are also tax benefits for rental property owners.

Did You Know?

• You can rent out a vacation home tax-free, in some cases.

• People who rent property to their family or friends can lose virtually all of their tax deductions.

Property owners who do not know these facts could be missing out on valuable tax benefits, and paying far more tax than required.

If you're a landlord looking for a managed service on your rental properties, to find out more about tax benefits for rental property owners, please call David Gascoyne, Sales and Lettings Manager, or Jason Dodd Sales & Letting Coordinator at Residential Estates, 01244 343355, and also visit: https://www.gov.uk/renting-out-a-property/paying-tax