Rothmans Salisbury are happy to advise on all aspects of tax and accounting, including property taxation.
If you own a buy-to-let property, on your tax return you can deduct your mortgage payments from only the interest element of the rent you receive.
If you have an interest only mortgage then you can include the whole amount you pay. If it is a capital repayment mortgage you will have to split out the interest charged and only enter that on your tax return.
The statement you receive from your mortgage provider should show the interest you have been charged.
Other common misconceptions about what expenditure can be deducted from your tax bill include:
- Work done on the property to prepare it for letting.
- Legal and professional fees for acquiring the property or drawing up a lease.
- The original cost of furniture and furnishings. Though you can claim the cost of replacing an item or instead you may be able to claim a “wear and tear allowance” if your property qualifies.
- Capital allowances on furniture and fixtures unless your property qualifies as a furnished holiday let.
Many of these costs can be deducted from your capital gain when you sell the property, but in the meantime you will need to budget for the appropriate income tax bill on the profit you make from the rent.
Property taxation can be complicated, so if you need advice please contact us.