5 HUGE MISTAKES Landlords Make with Tax Returns | The Property Tax Show E05
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- čas přidán 22. 06. 2022
- What are the most common mistakes landlords make on their tax returns - and how can you avoid them?
If you live in the UK and have rental income, you'll usually have to pay tax on it. You do this by filing a Self Assessment tax return if you own property in your personal name, or a company tax return if owned via a limited company.
In episode #5 of The Property Tax Show, Provestor CEO, James, and Head of Tax, Nadeem, dive into the top five mistakes we’ve seen landlords make when completing their property tax return.
#taxreturn #selfassessment #landlords #propertyinvestment
► Watch Episode #1 of The Property Tax Show: 3 mistakes landlords make with limited companies: • 3 MISTAKES Landlords M...
► Watch Episode #2 of The Property Tax Show: 4 tax efficient ways to take profit out of your limited company: • 4 TAX SAVING Ways to T...
► Watch Episode #3 of The Property Tax Show: Transferring properties into a limited company: • Why Landlords Move BTL...
► Watch Episode #4 of The Property Tax Show: LLPs vs partnerships: routes to property incorporation: • INCORPORATE Buy-To-Let...
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Good video, well scripted & helpful. Thxs 👍
What a gem. I was unaware of the deed of trust.
great information thanks
Thank you very informative
Great tips!
These short videos are brilliant...please can we have more frequently! 🙂
Thank you so much 🥰 We're working on it!
Thank you, lots of value in the points you have covered and the deed of trust is a real gem.
Thank you Kim 😊 Glad you found it helpful
Hear hear
Many thanks - great info.
Glad it was helpful!
Very useful
I think a lot will also depend if you have property owend by your Limited company.
And I assume you can then claim Vat if vat registered and any expenditure.
Great video gents, thanks :)
Glad you enjoyed it Paul! :)
Great advice, would I be able to do this and attribute some of the tax to any of my dependents?
the tax man is contacting me for my first property i rented for first time. this video is relevant
The video was helpful, thankyou, For the 'Deed of Trust', when owning a property and claiming through Self-Assesment, you say 50/50 for a married couple but what if our 2 children are entited to 10%. Does that mean a 40/40/10/10 split?
Thanks for the video. I replaced an old, worn kitchen and flooring with a new, basic ones so i feel i can claim for this. I have spoken to an accountant who said it would have been best to rent the property first and then replace but that wasnt practical. After watching you're video I'm going to go for it.
Thanks again.
Glad it was helpful!
Hi - thank you for vid! Can agent tenancy set up costs, and purchase/installation of new shower head and hose, and CO and smoke alarms in preparation for new tenants be declared as a Legal, Mgt, Other prof expense? Also, if my rental was untenanted for nearly 4months in the tax year, do I need to apportion property Repair and Maintenance costs? Also does a rethatch, replacing the old worn roof with new equivalent roof count as Repair and Maintenance? Many thanks for the vid and any advise re above!
Hi, If you have a deed of trust in place as I do with my husband 95%:5% if the property is sold can you use both partners full CGT allowance combined or does the deed of trust mean you can only use 95% and 5% of the CGT allowances? Hope this makes sense. I'm hoping on disposal of property we can use 100% of our CGT allowances combined. Allowance has obviously dropped off a cliff now but it would be useful to know for planning disposal.
great video, but i wish they are bit open and loud
Excellent video, some top tips, thanks!
With regard to windows ... if I've got old double glazing and replace them all with new double glazing (but standard model, nothing special) this should be seen as Revenue as it's a like for like and I wouldn't expect it to impact the value of the property.
Does that sounds right?!
Hi Billy, yes that's correct. HMRC now accept that UPVC is a like for like replacement so this would be allowable as a revenue cost. 😊
@@provestor thank you!
The video is brilliant. My friend bought a new house without carpet or wood floors. So she bought the wooden floor herself and asked workers to install it. If wooden floors are capital, are workers’ installation fees also considered capital? The carpet price includes installation, is it considered capital? So are curtains and installation fees also capital? If the installation fee is not capital, what is its category? Thanks
Awesome video that answered one of my questions with nice concise info. Not the waffle I've seen on other videos. Thank you.
Do you have a video that discusses managing a property from abroad? In particular I want to know if flights are are an allowable expense when they are for sole purpose of maintenance (I replaced a kitchen that that was falling apart with a new but equivalent quality).
Hi Kevin. The replacement of a kitchen to an equivalent standard one is allowable as a revenue cost. We don't have many foreign based landlord clients but I would be careful with flight costs associated with the upkeep of the property. HMRC do allow reasonable travel and subsistence costs when maintaining your property and they may perceive flights costs to be excessive. It would depend of course on the cost, the number of trips and of course what else the nature of your visit includes. I would recommend you speak to your accountant to get an overall picture of your status as a Landlord and whether this seems reasonable. Hope this helps! 😊
Very helpful video! Thanks so much for your informative, clear advice - it's helping me complete my first ever tax return after only recently becoming a landlord myself!
Please can I ask if repair work on a leaky shower (which was causing damage to my kitchen ceiling...) would be an allowable expense? Of note is that I had a shower over a bath tub taken out and replaced with a shower only (this was due to the nature of the water damage caused and several attempts of 'patching up' the original leaky bath/shower). This repair was conducted using standard materials and basic fittings (not with the intention to add value to the property, but instead to stop any further water damage and to ensure a functional bathroom was in the property).
Second point to note is the timeline of this shower repair work - it was my private home to start with, then in June 2021 I moved out (in with my partner) and decided to rent my home instead. During July/August 2021, I had the shower repaired and tenants then moved in at the end of August 2021. This was intentional as I felt uncomfortable having tenants in the property without a working bathroom and therefore chose to conduct the repair work first before moving tenants in. Does this mean I can - or can't - claim the repair work as an allowable expense?
Many thanks in advance for your help with this query!
Yes this is allowable as you are replacing like for like in the form of a shower facility. If there was damage done as a result of the old shower then HMRC would not treat this as capital on the basis the work is being done to restore the bathroom for use. The timing of the work is also ok. Although there was no tenant in the house at the time of the repair, it was done with the intention that the house is to be made available for rent and the work was necessary before moving a tenant in.
@@provestor Thank you so much for your incredibly helpful reply - I really appreciate it!
@@can_do_altitude Glad you found it helpful Natalie 😊
Can I show my mortgage interest as revenue expenses on my self assessment form. Please advise
Regarding deed of trust for married couple, do you need to change the title deed to tenants in common (alongside declaration of trust) in order to change the 50/50 rental income split or can it remain as joint tenants?
Hi Andy, thanks for your question. Yes, correct you would have to change the title as tenants in common. Hope this helps 😊
In your video you referenced an example where someone has moved from their primary residence and let this out. Subsequently they have tried to claim the interest in their existing mortgage. Can you please clarify if a primary residence is remortgaged and the funds used for personal use, the primary residence is subsequently let. Can the 20% tax credit for interest on the mortgage repayments be claimed?
Hi, thanks for the information regarding a deed of trust. If the owenership between a married couple is in joint tenancy (usual case), would a severance of title to tenant in common required before placing a deed of trust?
Hi there, When a property is owned in joint tenancy this is required to be reported to HMRC as 50:50 income. As tenants in common you can override the 50:50 treatment with a deed of trust or beneficial interest. Hope this helps!
I thought we weren't allowed to use mortage interest any more to save tax
Thank you for the video! Are service charge, ground rent and estate management fees tax deductible? This is for an apartment and so the annual service charge fees are compulsory.
Yes, these are allowable as wholly and exclusive costs relating to your property business.
if a person spends £35000 to extend lease by 150 years ,pays all at once, is part claimable or is it capital ?
Found this very useful. Can I ask about vehicle payments? If I was to purchase a car or van that will partly be used for commuting(to my day job) and family use and also used when checking or working on properties can the payments be offset against tax?
Hi, Tax efficiency for vehicles can be a complicated area. If the car/van is purchased by a company and used by employees including directors for personal use this could trigger Benefit in Kind obligations. The alternative is to charge your company for use of your own vehicle at the approved mileage rates (45p per mile for the first 10,000 miles in the tax year and 25p per business mile over 10,000.) Hope this helps!
Great video! If you own BTL property in your own name and have a room in your main residence used solely as an office can you still claim office space allowance?
I am also wondering this
Thank you for your clarity, in the rental minefield. Could I possibly ask you though, I have just bought a new property, which I intended living in, but after thought, I have decided to rent out for a couple of years or so. Would, claiming for initial outlay costs, like for instance, landlord insurance, be allowed, as I do intend, eventually, to live in the said property, or would this cause problems with HMRC, when I do cease renting out the property, and return it to private use ? I thank you for your advice in this matter.
Hi Joe. When you purchase a property which is to be operated as a BTL then costs associated with running the property as such would be allowable deductions. Ensuring they meet the criteria of being wholly & exclusively for that operation, landlord insurance can certainly be justified as such an expense. Any costs for which you are going to benefit from once you take over the property in a couple of years may need to be restricted. Living in the property after renting it out would not restrict your allowable expense deductions during is rental period. Hope this helps 😊
Hi, you mentioned in regards to Mortgage interest - a portion of which is not an allowable expense. Is it not the case now that 100% of mortgage interest is not allowable if the property is not within a Ltd Co. structure?
Hi Syed, You will still get some mortgage interest relief in your personal name. However, the relief is now capped at a 20% reduction on your tax bill. This mainly impacts higher and additional rate earners - basic rate earners pay around the same amount of tax before the rule change. In a limited company, 100% of the mortgage interest is deductible, no matter what your profits are. Hope that helps!
if you have a profit loss one tax year on revenue allowances, can you carry that loss forward to the next tax year, to deduct from the next tax years revenue profit?
Thanks, do you know how to identifty just the interst (excluding capital) in a repayment mortgage? I have an interest rate but that seems to incude the capital
Ask ur lender for a mortgage interest certificate.
is mortgage product fee an allowable expense?
very interesting, can you claim for insurance on the property, also can you claim for Gas checks etc, thanks in advance
Yes u can.
I really found your video informative, thank you both. I am faced with having to retire early due to ill health. I will be living outside of the UK most of the year and want to rent out my property with an agency as a fully managed let. I was going to change my mortgage to an interest only buy to let of about £35,000 value. Could you please help me with information on what tax I'd have to pay etc and what I can claim to offset tax. Thank you
Hi Neil, we are glad you found our videos useful. I would really recommend you get some tax advice here as a non-resident. There are other things you need to consider which can become complex as a non resident landlord, and how you are paid by your management company or tenant. We are happy to assist you so please call the office and we can arrange a call. Thanks 😊
Yeah but a waste of time for the people as like the management company at 40 - 42 leopold rd Felixstowe ip11 7 np never ever pays tax and where’s there off shore stashed tax evasion accounts hidden ?
nice
Thank you! Hope it was useful 😊
Great video - so to clarify, can anyone claim the £6 per week allowance so long as they worked on the property admin from home?
Hello! As an employer, you can pay your staff (including company directors) £6 per week when they are working from home. Hope this helps!
Can the private landlords claim the £6/week allowance?
45p/mile no way covers the cost of business travel,
My brother & i jointly let a property (50/50). We have spent over £17K on solicitors fees trying to evict our tenant over 4 tax years (covid & solicitor's errors) and are currently trying again. I haven't paid tax in the past, but I am likely to this tax year (2022-2023) because I now get a pension. Can I set my half of these costs against CGT when we sell in 2023-2024 tax year? I haven't mentioned them in previous tax returns as they were relatively insignificant amounts. I can't find anything specific on line except we 'may be able to'
Solicitors’ fees incurred to evict tenants or to recover rental income are treated as incurred wholly and exclusively for the purpose of the rental business and as a result are allowable. Hope this helps!
@provestor Thank you. A great relief to hear that
Hello, great content it has been very helpful advice. Can i ask a quick question? I can't seem to find the answer online.
If i ultilise the £1000 Landlord allowance instead of opting to list my expenses, can i also claim for the 20% tax relief for the interest for my mortgage?
Hi Callum, glad you found it helpful. You cannot claim mortgage interest relief if you are utilising the £1,000 trading allowance. See: www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income#:~:text=The%20property%20allowance%20is%20a,of%20the%20gross%20rental%20income. Hope this helps!
I am converting my current house I live into a rental. Is painting and decorating to make it nicer for a tenant to live in ok to claim if you did it before a tenant moved in?
Hi, Costs incurred "wholly and exclusively" for the purposes of the property rental business will be deducible for tax purposes. If the cost is made in advance of the property business starting it may still be deductible. This HMRC guide has more details: www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2505
Hope this helps!
Thank you very much for your very helpful and practical advice. Can I ask a few questions please? I am planning to let out my flat, which I currently live in while buying/moving to a new home. In this case, can the followings to get ready the flat to let out be accounted as revenue expenditure? 1) replacing beds and walldrobes 2) replacing current carpets with laminate floor (price range is similar to carpets)? Can I claim all the expenditure mentioned in this video if I have my BTL properties on my name rather than through Limited company? Lastly, can the deed of trust be still applicable if I live in Scotland? Thank you very much for your help in advance.
Hi Sunny, thanks for your comment. We will be making a Shorts video in reply to your questions - keep your eyes peeled in the next couple of weeks! :)
How can we do deed of trust as husband and wife ? Do we need to write some legal documents before tax returns?
Hi thanks for the comment. We suggest you get a property solicitor to draft this document for you. It's a legal document between you and your wife and does not need to be submitted to HMRC. Hope this helps! 😊
I took out an interest only mortgage on my buy to let in order to finance a house move for my primary residence. Can I claim tax relief on that?
Hi Dave, Unfortunately, HMRC would argue the interest is not an expense "wholly and exclusively" incurred in the pursuit of your BTL property business.
Im selling a B2L property now, that was bought 12 years ago. I didnt claim the mortgage arrangement fee against rent then - Can I do this now (IE in the year that Im selling it, 2024)? The HMRC CGT calculator asks, 'How much did you pay when you began owning this property?' - It seems strange that you can't include this fee, included in the total figure, for this box.
Hi, thanks for your question! Unfortunately only Capital costs are allowable against your CGT bill when selling a property. Revenue costs are not allowable at this stage.
Can you claim for a new roof against your holiday let.?
Hi there, the tax treatment of the costs would depend on the nature of the work being carried out. It could be treated as an allowable expense if the work is to repair the existing roof / making a like for like replacement rather than improving it. If it's an improvement, it would be classed as a capital expense which can be claimed when you sell the property.
Hope this helps!
These 'grey areas' are ridiculous. Why should it be down to a matter of 'opinion' as to whether an expense is capital or chargeable ? Items that a landlord may need to replace once every 10 years or more (windows' kitchens, bathrooms for example) should be chargeable irrelevant of whether they are actually 'improving' the property. Of course they are, otherwise you would not be replacing them !
Can I claim the fees added by my letting agent ?
Agents' commission & management fees yes. If there are additional charges for sending out someone to carry out repairs also yes.
Hi
I earn £40,000 per annum in rent and £7,000 in a pension which equals £47,000
So does my personal allowance of £12500 come off £40,000 or £47,000?
Hi, the current tax-free allowance of £12,570 is deducted from your total taxable income for the year.
£47000 but you are highly likely to have expenses associated with the Rental income that will reduce the 40K.
You are protesting the wrong issue! Don’t protest the amount…protest where the authority comes from. In a brief, taxation of your non commercial property is being misapplied by your county under the color of law. Protesting the amount of the tax in essence is saying you think the tax is ok, just not the amount. Taxes are handled locally, not by the state. Constitutionally speaking, the state has no inherent power to impose taxation on your non commercial property used as shelter. If the state has no power, there is no power that can be passed to your county. This is an extensive research of Federal and State Constitutions, State Statutes, State Administrative Codes, Blacks Law, American Jurisprudence, and case law already decided by competent courts. The research is based on Florida law and your state too will have similar laws being that all states must be in compliance with the law of the land…the united States Constitution.
We're in England!
Good advice but please learn to say HMRC correctly! Aitch Em Are See. The letter H is an Aitch not a Haitch.
Nobody cares. Everybody knows hmrc stands for her majesty’s robbing cunts
Seriously? Is that the best you’ve got?
What a bell-end comment, especially when the intention of this video is to help people 🤦🏼♂️
@@0asis2007 You think they put this on here just to be nice to people? Ha! Sorry to break it to you but everything is trying to get you to click on it so that they get money from the adverts.
I am helping them as you sound like a moron if you say haitch and people will switch off. You need to sound educated if you are to give out information.
Just grow up and stop being so miserable.