For landlords hiring a property management firm or using a letting agent’s property management service, unfortunately, the fees are not tax deductible. By hiring a letting agent‘s property management service, landlords can expect to pay between 10-15% of their rent for their service and this figure could even climb as high as 20% for some private property management companies.
One way that landlords can avoid paying these fees is to opt to self-manage their properties, which is why many are turning to websites such as TheHouseShop.com, as they offer many D.I.Y services such as tenant referencing, rent collection, end of tenancy cleaning and much more.
Items that are tax deductible when letting residential property:
Council Tax and Utility Bills During Void Periods
Any expenses that are incurred on behalf of their tenants during a void period can be claimed back on a tax return. This is also the case if landlords pay any bills on behalf of their tenants.
If the landlord owns a leasehold residential property which is subject to ground rent fees to the freeholder, then these can be claimed back as well as any extras such as security guards, and on-site visits. The ground rent charges are usually to cover general maintenance works within the common or communal areas of a freehold property.
Wear and Tear Allowance
Landlords are able to deduct any costs from their tax for wear and tear that has occurred at their property during the course of a tenancy. However, due to recent government changes, this is only for properties which are fully-furnished homes as part-furnished or unfurnished properties are not included for wear and tear tax deductions. The amounts used to be up to 10% but the recent changes mean that now landlords are only able to deduct actual charges that they incur and must replace like with like in order to be eligible.
Letting Agents Fees
Should a landlord pay a letting agent to market their property then their charges are tax deductible. Both bricks and mortar and online letting agents fees are allowed to be deducted from a tax return.
Tenant Finding Costs
The same goes for landlords paying for a tenant find service, these fees will also be eligible for tax deduction. This will include any costs incurred by the landlord when finding new tenants such as advertising, tenant referencing, credit checking, protecting the tenant‘s deposit as well as any inventory costs.
Any costs incurred by the landlord such as repairs or maintenance will be allowed to be deducted from a tax return. Such as exterior and interior painting and re-decorating, mending broken windows etc.
There is a whole host of other, smaller expenses that can be claimed back from the tax man such as travelling between properties, phone calls, stationery, paperwork etc.
If landlords are unsure as to which costs they can claim on when filing their self-assessment tax return, then they could hire an accountant who will be able to advise them further. Accountants costs are also tax deductible too which makes a big difference not only to landlords financially but also it is less hassle than processing their tax return themselves.