Posted by Admin - 04/05/2016
As a Landlord you can claim certain rental expenses against the income you earn from your rental property, reducing the amount of profit made and therefore paying less property income tax. You may deduct any expense that is a direct cost which is a result of letting out the property especially property repair costs, such as;
Decoration and repairs to the fabric of the property. These are things such as exterior and interior painting, damp and rot treatments, mending broken windows, doors and appliances such as cookers or boilers. Re pointing and replacement of roof slates, flashing and guttering.
You cannot however deduct for improvements such as extensions or any expenses spent to bring the property up to standard before the first letting. If you have bought a property in a run down state it is likely you paid substantially less for the property. Capital works cannot be deducted from rental income as an expense, these can however be added to the cost of the property and may reduce any capital gain when you come to sell the property in the future.
Deciding between improvement and repair can be tricky, for example, if you replace single glazed windows with double glazed is this repair or improvement? In cases such as these, you are allowed to replace with the modern equivalent and therefore this cost is classed as a repair and can be deducted against the property income, but, replacing a kitchen for a modern one may be treated as an improvement which is not deductible from the property income.
If you are letting a furnished property and the furnishings are sufficient for the tenant to live there without having to purchase additional items, you can deduct these as expenses against the rental income. This is called wear and tear allowance. The allowance allows you to deduct an amount each year to cover the cost of furnishings. It is calculated at 10% of your total rental income rather than a calculation of your actual spend. Charges that would normally be paid for by the tenant but paid for by you the landlord, for example, council tax or water rates etc. will be deducted from the allowance.