Maximising Profits On Your Buy-to-Let Properties
The buy-to-let market continues to prove an attractive proposition for a large number of investors who view the market as a relatively steady way to increase wealth in the long-term; especially in comparison to other financial sectors such as stock trading, for example.
That being said, changes in legislation through recent Government announcements on reductions to landlord tax relief earlier in the year has meant that, whilst buy-to-let certainly does remain lucrative for investors, these changes might require some changes to the way you manage your portfolio’s expenses and tax rates to provide you with the best opportunity of maximum returns in today’s marketplace.
Property Repairs and Maintenance
It’s always worth noting those parts of your business for which can legitimately claim back against your tax obligations. And one of these that are perhaps occasionally overlooked is with regard to the maintenance and repair of your properties. You CANNOT claim tax relief on things considered improvements, for example an extension or similar work that would likely add value to the property. However, things considered to be to repair or maintain against general wear and tear, such as painting work, fixing utilities and other repairs and maintaining the working order of household items ARE considered to be tax-deductible given you every reason to ensure that these measures are carried out. Of course, a further profitable reason to be diligent in the upkeep and maintenance is to ensure that the property remains desirous for new tenants.
Council Tax and Utility Bills
Another potentially overlooked item when landlords fill out the tax returns is in relation to the bills you might pay on the property. As it currently stands, if you as the landlord currently pay any kind of utility bill or council tax on the property (as opposed to the tenant) then you are able to claim this back against your tax. This equally applies when the property is empty.
On-Site Services and Charges
Many properties, particularly flats or apartments within complexes or blocks, are likely to be subject to a range of service charges or possibly rent to the freeholder. These could be for services such as:
- Heating & Lighting of Common Areas
- Caretaking or General Maintenance
For these types of services then you are entitled to claim back against your tax obligations, helping manage your costs that much more.
Securing tenants for your property incurs a range of costs to you. These include things such as marketing expenses, tenancy agreements and credit checks, all of which can add up tenant by tenant over the course of the year. Indeed, it’s claimed by the National Landlords Association that it can cost the landlord upwards of £300 per tenant. Therefore, it’s worth ensuring that you claim these expenses back when it comes to the self-assessment forms at the end of the financial year.
Even if you only have one property, there is a legitimate claim for ‘home’ office expenses associated to being a landlord. These are essentially the costs one might reasonably incur through operating an office from home for the purposes of managing your property business interests, irrespective of size. Ensuring that these are being claimed further adds to your savings and can impact the bottom line.
Don’t Miss the Deadline
Online tax returns need to be submitted on January 31st and you really don’t want to be missing this deadline. To do so can mean a penalty of £100 – a completely unnecessary expense that’s easily avoided.