Renting out a property isn’t exactly cheap, and as with any form of business, you’ll incur a number of costs.
The good news is that as a landlord, you’re able to reclaim some of these expenses that tally up during your day-to-day. But you may wonder: “What expenses can I claim?”
Our article will explain the essential allowable costs you can claim back from HMRC.
What are allowable expenses?
In order for you to claim back the costs of an expense, it must be ‘wholly and exclusively’ for business purposes. For example, travel between your house and your rental property is not generally claimable.
On the other hand, travel from your rental property to a shop to buy materials for the property is an allowable business expense.
When you have figured out what is and isn’t an allowable expense, you’ll have to declare it on either your self-assessment tax return (for individuals) or your corporation tax return (for limited companies).
Typically, there are some of the main expenses landlords should claim whenever possible.
Top allowable expenses for landlords
- Repairs and replacements
- Insurance
- Council tax, heating/lighting, water rates
- Service charges and ground rent
- Safety certification
- Professional fees (estate agent costs, management fees, accountancy fees)
- Mortgage interest (fully in companies and some tax relief for individuals)
Repairs and replacements
Occasionally, you may have to replace things in your rented property. You won’t want your tenants living in a state of disrepair.
When necessary, you can reclaim any cost associated with repairing fixtures in the property. This could be anything from appliances to structural damage. One thing to remember, though, is that the repairs will only be eligible if they don’t add value to the property.
If an asset is beyond repair, you can replace it with an item of equal value. This can include light fixtures or carpets, for example. If you don’t carry out the repairs yourself, you can also claim back any fees spent on hiring a specialist to do the work.
Property charges
You may not instantly think that household bills are eligible for expenses, but sometimes this is the case.
If you, as the landlord, are responsible for paying things like ground rent, council tax or utility bills, you can claim these back. However, when the tenant is responsible, you can only claim for the times when the property is vacant.
Service fees
Marketing your vacant property can be expensive, especially when you don’t have rental income. You’ll be glad to know that costs associated with marketing your property during these times can be claimable. Photography, letting agent fees and other marketing materials all fall under allowable expenses.
The same applies to other professional services you may have to use. Debt collection services, evictions and solicitor fees are also all claimable.
Don’t lose out
There are several costs associated with renting out a property, some of which you may not even have considered as an allowable expense. You should reclaim as much as possible whenever you can.
Get in touch to discuss your allowable expenses as a landlord.