OK – so all investors and landlords who have benefited from last week’s 1.5% base interest rate reduction are still smiling, and rightfully so!
The chances are we’ll be smiling even more if the base rate continues to come down over the next few months, as indicated by most financial experts.
Now, before we start smiling too much we should remember that if the reduction in interest rates means more profit from our rental income then the last thing that we want is to be handing a good chunk of this to the taxman!
Our next mission must be to reduce our landlords’ tax liability. What I mean by this is that we must claim for every property related expense that we have incurred.
Now, we all know that the single biggest expense we can claim is mortgage interest relief.
But did you know that there are numerous other property related costs that we can claim, which in many cases won’t seem like much initially? However, at the end of the tax year, when we add them together, they could be the difference between paying an unnecessary property tax bill or not.
Here are some typical costs that we often miss but should definitely include:
– safety certificates, e.g. gas and electrical safety;
– stationery, e.g. stamps, envelopes, books;
– computer equipment;
– bad debts;
– legal and professional costs, e.g. accountancy costs;
– service costs, e.g. window cleaner, gardener;
– furniture/appliance rentals;
– advertisement costs;
– letting agent costs;
– books, magazines, etc;
– security/smoke alarms;
– telephone calls, including mobile telephone bills (but make sure you have an itemised bill to prove the calls made);
– bank charges (e.g. interest charged on property bank account).
As you can see, some of the costs above may seem minor, but when you add them together they will reduce, if not wipe out your property tax bill.
