What expenses can I claim back?
Many landlords are unaware that they can claim back for expenses such as the petrol cost of travelling between their rental properties and phone calls or texts sent in connection with a property. It is also possible to claim back the cost of subscriptions to property investment magazines, plus money spent on advertising the property, as well as legal and accountancy fees connected to the buy-to-let.
The types of cost landlords can claim vary according to the type of property. The options are residential properties, furnished holiday lettings and commercial properties.
These allowable expenses are the costs landlords incur to run their rental properties. For residential properties these can include, but aren’t limited to:
- Letting agent fees
- Building and contents insurance
- Property maintenance and repair costs (excluding improvements)
- Utilities
- Council tax
As a landlord, you may also be able to claim tax relief on the cost of replacing domestic items, such as beds, sofas, fridges, etc.**
For a full list, visit the Government website, as other allowable expenses may be included for furnished holiday lets and commercial lettings.
Claim back for void periods
If, as a landlord, you’ve struggled to find any occupants for your property, you may be able to also claim back some of the costs needed to cover bills on your self-assessment tax return.
Move properties into a company
Another option for property investors would be to move their properties into a company structure, which could work out to be more tax efficient. In this way, a property investor is essentially selling the home to their new company and so, as director of the latter, they would typically have to pay stamp duty at the higher rate on the purchase. The tax paid on a limited company is likely to be a greater benefit to higher rate taxpayers when compared to basic rate taxpayers.
However, there may be other costs associated with setting up and running a limited company, including any managerial obligations and ongoing costs that you should consider, so research this option well before taking any steps towards it.
Use all of the reliefs available to you when selling your buy-to-let
These could include estate agents’ and solicitors’ fees, stamp duty and also surveying and valuation costs. You can even claim back money spent on the property during the renovation. Someone who made £15,000 in capital gains and spent £5,000 on a loft conversion, for example, would not have to pay any tax as that would bring the total gain to £10,000 which is less than a person’s annual allowance of £12,300. It's worth noting that the capital gains annual allowance has gone down from £12,300 to £6,000 in 2023-24 and then will go down again to £3,000 in 2024-25.
The information here is for guidance. No responsibility is accepted by us for reliance on it. You should always obtain professional advice before making any decision relating to property, taxation or financial planning. Prices, numbers and projections are correct at time of press and are for illustration only.
