The state of the UK\u2019s housing market over the last few years may have meant that you\u2019ve found yourself as an accidental landlord with a property you weren\u2019t able to sell. According to research by Rightmove, accidental landlords make up around 30 percent of all private landlords. However with the shift from a nation of homeowners to a nation of renters this might mean that rather than suffering because of the recession, you might have accidentally become a beneficiary!<\/p>\n
Letting property out is a business though and if you haven\u2019t planned to invest in property, being a landlord can be a learning curve especially when it comes to tax and how it works. If you\u2019re not self employed and you\u2019re used to paying tax automatically then one of the first things you\u2019ll need to get used to, is a tax return at the end of the year.<\/p>\n
The rent you receive will be treated as income and needs to be taxed appropriately. As a landlord there are certain expenses you can claim back;<\/p>\n
\u2022 Revenue expenses can be deducted from your rental income when it comes to tax purposes. The biggest saving you\u2019ll make here is claiming back mortgage interest charges. Any professional costs such as letting agency fees, referencing and any insurance costs can also be deducted along with repair and maintenance charges.<\/p>\n
\u2022 If you also let the property furnished you can also claim up to 10 percent of the rental income each year as a wear and tear allowance which can be deducted from your rental income for tax purposes. This allowance can be claimed each year that the property is let as a fully furnished property.<\/p>\n
\u2022 You might be concerned about making a loss on your rental property but not to worry; it\u2019s possible to roll this loss forward to the next tax year. You can keep doing this each year until you make a profit at which point the losses can be offset against the profit. Make sure you let HMRC know about your losses to benefit from this, the easiest way to do so is on your self assessment tax return.<\/p>\n
The second tax you\u2019ll encounter is capital gains tax, which will be applicable when you sell the property. When selling a property that is your main home – capital gains tax does not have to be paid, however when you sell a buy to let property or a property that you have rented out at a profit this must be paid. Capital gains tax only applies to the gains you have made over the initial purchase price, not the total money you receive. Since April 2008 this has been charged at a flat rate of 18 percent (excluding advanced rate tax payers).<\/p>\n
If you are new to renting out property it\u2019s always a good idea to seek the advice of a solicitor or accountant to make sure you\u2019re aware of all the tax implications of owning and renting a property out. However you may discover that letting property is a rewarding investment as Rightmove data shows that one in eight accidental landlords expects to buy an additional investment property this year.<\/p>\n
Written by Sarah Male<\/a>, Urban Sales and Lettings<\/a>\u00a0– online estate agents selling and letting property in the UK<\/p>\n","protected":false},"excerpt":{"rendered":" The state of the UK\u2019s housing market over the last few years may have meant that you\u2019ve found yourself as an accidental landlord with a property you weren\u2019t able to sell. According to research by Rightmove, accidental landlords make up […]<\/p>\n","protected":false},"author":132,"featured_media":16419,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-16418","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"yoast_head":"\n