In November we reported that buy-to-let investors were to become a key target in a crackdown on tax evasion by HMRC. With 31st January deadline looming Martin & Co Crawley are advising landlords to ensure they submit their online tax return and pay any liabilities arising from 2012-13 tax year.
There are many measures available to landlords to help reduce their tax liabilities. Mortgage interest is the leading cost which landlords are allowed to use to offset against the rental income. This is why landlords tend to use interest-only loans where capital is not repaid and why during the height of the recession, as mortgage rates tumbled, landlords saw the incentive to increase their borrowing and buy further properties. Repairs and general maintenance are also allowed as long as they are not deemed ‘improvements’. During the low interest rates we have seen some landlords use this period to raise finance to undertake bigger repairs such as roofing.
Other expenses that can be offset include: mortgage broker fees, letting agents’ fees, ground rents, service charge, accountants and insurance.
At Martin & Co Crawley we get asked many tax related questions through the year and although we have a basic understanding we are not tax experts. Some of our landlords are using Bourne Accountancy to prepare and file their tax returns. You can access the dedicated landlords section of their website by clicking here for information and advice.