5 Simple Ways to Maximize Profit on Your Rental Property
The UK rental market (buy-to-let market) has, and continues to be, a popular environment for shrewd investors in search of steady, long-term and regular returns on the their outlay. With demand for good quality rental accommodation still high and robust pricing across the country, the market has tended to attract those looking for greater stability in their investments, as opposed to some of the more volatile financial arenas.
However, the market has altered somewhat over the past twelve months, with changes in legislation towards tax relief for landlords are putting new challenges in place for landlords and would-be landlords. Nevertheless, despite these changes and new challenges, by adapting your business model accordingly and being aware of some simple methods, investors can ensure that their rental property remains a sound investment in the short and longer-term, delivering the profit levels desired.
Tax Claims on Maintenance & Repair Work
Understanding the things you can legitimately claim tax relief from is a must for any investment or business plan in any field, and the buy-to-let mortgage is no different. General maintenance and essential repair work is one such area that offers a legitimate means of tax saving which can strengthen your profit margins.
This can include repairing and replacing essential household items due to general wear as well as ensuring the working condition of facilities within the home. Maintenance and repair can extend to paintwork and the overall upkeep of the property, although it needs to be made clear, that any work designed to improve the overall value of the house are not tax deductible.
Of course, not only do you get the additional financial and tax benefit from maintenance work, it also ensures you’re keeping the property in good condition, which can ensure it’s in high demand from future tenants.
Claim back for Services
If you own an apartment or dwelling within a block or complex, then there’s a fair chance that you might be subject to a degree of different charges for a variety of services around the grounds. These might include such things as cleaning and gardening services, security or the maintenance of communal and public areas.
All of which are tax deductible on your year-end claims.
Bills and Council Tax Payments
If the landlord of a property pays the bills – water, energy or other utilities – then you are entitled to claim this back against any tax burdens on the property. The same is true of council tax charges – if you the landlord pays the charge, then you can claim it back on your returns. It should also be noted that, as the law stands at present, this is also the case on properties that are empty.
Naturally, if the tenant pays these, then you cannot.
Claiming for cost of attaining Tenants
Once you enter the rental market you need to ensure that you’ve got tenants to live within the property. And in trying to achieve this, the likelihood is that you will have to spend some money. From advertising through to credit checks and legal agreements, the process costs anywhere up to around £300 per tenant in the current UK market, which of course eats into the profits. However, these again represent legitimate expenses that can be claimed back on the self-assessment forms.
Business, admin and office costs
Your property is an investment and a business which needs to be managed. As such, you are entitled to claim office expenses as part of your annual P&L. Whether you run a portfolio of properties or just one, you will inevitably incur administrative costs from stationary to additional energy or communication charges, each of which you may be able to demonstrate as a legitimate claimable expense.