New and inexperienced landlords could be missing out on hundreds of pounds a month at a time when the weak property market means they need all the money they can get, according to specialist buy-to-let lender, Paragon. That’s because many are failing to claim for all of the property-related expenses they can offset against their annual tax bill.
Rent from buy-to-let property is subject to UK income tax and should be declared on a Letting Income Schedule. However, landlords can also use the same schedule to claim back costs “wholly and exclusively” incurred in generating that income.
The latest example to join a growing list is an energy-saving allowance of up to £1,500 when energy-efficiency work, including insulation improvement, is carried out. Paragon’s latest survey revealed that 86% of landlords were unaware this existed.
Other big tax deductible expenses include mortgage costs, water rates, buildings insurance, “like for like” repairs and maintenance, wear and tear for furnished properties of up to 10% of rental income and advertising costs for new tenants. For more, see Paragon Mortgages Buy-to-Let Tax Guide.