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When preparing to let your property, it is useful to know what costs landlords and tenants have to pay. In general, the costs for landlords include the tenancy agreement and inventory check in or out. Additionally, there are the following costs for landlords:
- ■ Lettings management and renewal fees
- ■ Service charges and ground rent
- ■ Maintenance and repairs of property
- ■ Building and contents insurance
- ■ Annual gas and electrical checks
- ■ Energy Performance Certificates
- ■ Deposit Registration
- ■ Tax
Tax Tips for all Landlords
The excess of rental income over allowable expenses is subject to UK income tax. Our advice is simple:
- ■ Under no circumstances should you conceal property income from HMRC.
- ■ Take steps to mitigate your tax liabilities by seeking professional advice from a reputable firm of accountants who will advise on income tax and capital gains tax issues.
- ■ Retain all invoices for sundry expenses such as ground rents and repairs, and ensure that the nature of the work is clearly stipulated. Along with your mortgage interest, you may be able to offset these expenses against your rental income to reduce your tax bill.
- ■ A detailed inventory and record of damages must be drawn up at the beginning and end of each letting period. This may well avert a potential dispute over replacement costs which are allowable if no ‘wear and tear’ allowance is claimed.
Tax Services for Overseas Landlords
Income from letting UK property is subject to UK income tax. If you live abroad we must retain tax on rents received unless you have been approved by HM Revenue and Customs (HMRC) to receive rent without tax deducted.
In order to receive your rent gross, you must complete the relevant paperwork and submit it to the HMRC before the start of the tenancy. You will then have to submit annual tax returns showing details of your lettings income and expenses.
Visit www.hmrc.gov.uk for more information or contact your local Hamptons International office who can provide you with the relevant forms.
If you have a mortgage on your property and you want to let it, you must get permission from your lender in the form of a 'consent to let'. If you do not, you could be in breach of your mortgage agreement.
Whatever your circumstances, finding the most appropriate finance arrangement for your property is essential. This can prove to be a stressful and time-consuming experience.
Through Hamptons International’s relationship with Capital Private Finance, their advisers can help address these challenges with specialist property finance advice and access to a wide range of loans and solutions tailored to suit your needs.
For more information, call +44 (0)843 290 7302 or email firstname.lastname@example.org.
Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances and loan amount. The fee is up to 1.5%, but a typical fee is 0.67% of the amount borrowed.