Tax deductions for landlords’ expenses

Tax calculations for rental property expenses need not be complex. Here is an alternative simple way to claim expenses. And, for accountants assisting their clients to purchase investment properties or looking to bring more landlords on as clients, a guide for accounting professionals on who landlords are, their sources of funding, and more.

by | 13 Dec, 2023

A property owner and accountant stand in a residential property kitchen, looking together at information on a tablet the accountant is holding.

Individual owners of rental or investment properties that gross less than £1,000 per year do not need to declare this income to HMRC, even if they do need to complete a tax return for other income.

For individual property owners making more than £1,000 per year on investment properties, that income must be declared to HMRC.

There are two methods for individual landlords to claim expenses related to their properties as deductions against their income, and they can switch between the methods each year.
Expenses: The cost of eligible expenses related to the property/properties is deducted from the gross taxable income, simplifying the tax process..
Property income allowance: Individual landlords can deduct a flat £1,000 from their rental income, but not more than the total property income itself.

Pros of using the property income allowance include simplicity and reduced record-keeping, particularly for landlords with low expenses.

It is generally not suitable, however, for high-expense properties with annual expenses exceeding £1,000 or landlords with multiple properties who derive a significant portion of their income from rentals. In these cases, the property income allowance risks missing out on larger deductions.

Meet the landlords

Individual landlords are more likely to be male, and male landlords are more likely to own more than one property – 55% of landlords are men and 44% are women.

The median age of a landlord, 58, is also significantly higher than that of the general population, 39. Two-thirds of landlords are 55 and over. 

 

 

 

 

 

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