NEW LANDLORD

[SPARKY20]

HI, I RECENTLY STARTED RENTING A PROPERTY AND WOULD LIKE SOME ADVISE ABOUT WHAT CAN BE CLAIMED AS AN EXPENSE? ALSO I WOULD LIKE TO KNOW IF THERE'S ANY FREE ACCOUNTING PROGRAMS OR PRO FORMA'S TO HELP WITH THE ACCOUNT PRESENTATION. I WORK FULL TIME SO THERE'S NO ALLOWANCE AVAILABLE!

REGARDS TO ALL,

MOLES..........

[Chestnut]

Keep an ongoing list with dates of every income and expense on property using a simple Excel computer spreadsheet - a page for each year. Add new data as soon as possible when it arises - saves time later - use the sheet to give the total. I have never used an accounting programme but others may recommend one.

On the Rented Property Section (make sure tax office sends this page) of your HMRC Self-Assessment tax return form, state gross and net income and total expenses deducted in the relevant boxes. The expenses include insurance, management charges if any, gas certificate and annual service and costs of items replaced for wear and tear, paint etc. The HMRC assessment guidance notes should indicate what should not be deducted.

If the property is jointly owned divide the income and expenses between owners and only enter your share of each on your tax return.

Both the S-A form and notes can be downloaded from HMRC website. The S-A can be filled in on-line but I haven't ever done this.

The very first self-assessment form may take a (weekend) afternoon. Keep a copy and subsequent years should then only take an hour or so. That is all HMRC has asked for - no supporting documents are requested but wise to keep a copy of spreadsheet and bills just in case.

If you have only rented since 6th April 2009 your first tax return for this will not be required until after 5th April 2010.

I am not a tax expert but have done this satisfactorily for many years.

[Rental Lease]

Here's a good, basic article on real estate tax deductions that you can take advantage of: Real Estate Tax Tips

It includes things like depreciation, mortgage interest, private mortgage insurance, etc.

That's actually one of my favorite things about being a landlord, is writing off so many of the expenses of property management and ownership, and cutting pretty heavily into my taxes.

Best of luck to you,

_______________________

Brian

EZ Landlord Forms

[Chestnut]

"Real Estate Tax Tips" advice may be of US origin. Be aware any differences from UK tax legislation.