In recent months more and more clients have bought a second property as an investment and are considering more properties. As a reminder when you let property it needs to go onto your Self Assessment tax return even if you make a loss, as HMRC are getting pretty skilled at spotting let properties! This also applies to making sure you complete the Capital Gains Section of your tax return when you come to sell it!
There have been subtle changes in the way let properties are taxed over recent years and more are to come:
For more information or to see how this may affect you or your business, contact me for details
There have been subtle changes in the way let properties are taxed over recent years and more are to come:
- Unfurnished Properties - The renewals basis for things like white goods was abolished 6 April 2013 for unfurnished property leaving landlords with no relief against expenditure on things like fridges and cookers (unless built in) - ironically they could be rented and this would be allowable!
- Furnished Properties (remember these properties need to be ready to move into - not just a table and a bed!) - Landlords currently enjoy a 10% wear and tear allowance on rents received. This will be abolished from 6 April 2016 and landlords will only be allowed to claim the actual amount of any items replaced
- All properties - at present full tax relief is available for interest on a loan used to fund a property or improvements. From April 2017, tax relief on property loans (including mortgages on single properties) will be restricted so that by 2020, interest will not be an allowable expense but it will receive tax relief at 20%. For those people paying 40% with high mortgages some careful planning will be required
- Rent a room - good news here this rises to £7,500 from April 2016
For more information or to see how this may affect you or your business, contact me for details
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