Worth his or her weight in gold, your accountant needs to understand your financial goals as well as your financial circumstances.
You are liable to pay tax on any rental income you receive from your properties, and yet there are a number of allowances you can claim before computing the final tax figure.
You can deduct the cost of interest payments on your mortgage, the cost of the letting agents, property maintenance and also an amount for wear and tear if your property is furnished.
The cost of furniture bought expressly for the property is allowed and items such as carpets, the shower curtain, kitchen accessories, crockery & cutlery are all legitimate costs.
Also, when you make trips to the property to decorate it, incur the expense of an electrician or a decorator, you can claim this cost. You should record all costs incurred in setting up a property portfolio because the accountant may not regard them as eligible to be claimed if you cannot provide receipts.
You can also make use of offsetting the tax against your personal tax allowance. For example, if you are buying a property with your partner and they are not making use of their personal tax allowance as they are not working, the rental income tax liabilities can be offset significantly if the property is in joint names.
It is prudent to make detailed notes of your income and expenditure, and keep any relevant receipts. Your accountant will have a preferred method of keeping records which you should discuss with him.
At Merrick Binch, we can give general advice of tax matters when renting properties, and can also introduce you to a range of experienced accountants specialising in tax matters of landlords.
If you require any further information, call the Merrick Binch Lettings Team on 02476 578888.