Top 8 Tax Allowable Property Running Costs You Need To Know


Simon Misiewicz

18th May 2015

Are you fed up of paying too much tax? Are you worried about getting it wrong with HMRC?

The Diagnosis

The problem we all face is knowing what costs can be offset against your property profits. The less profits you have, the less tax you pay. It is that simple.

As such there may be many property investors that do not offset their costs against their income. Not only that but there will be many property investors that do not keep their receipts or keep track of their mileage that may be offset against their income. As a result they will pay more tax than they really need to.

The Treatment

I know that HMRC tax laws are complex. I should know I have personally read over 1,000 HMRC pages. There are many costs that are allowable but I am going to keep it really simple to help you reduce your tax liability. Are you ready?

  1. Repairs: You may need to carry out some repairs to the property before, during and after your initial refurbishment. These costs are for repairing roof slates, kitchen doors, brickwork etc.
  2. Replacement: These are costs of replacing items such as bathrooms, integrated kitchens, windows and boilers. Yes these costs are 100% tax allowable as long as they have been replaced like for like.
  3. Renew: You may be touching up paintwork to the property or making good of any old technologies such as the wiring of the house. These are renewing the existing items in the property.(2)
  4. LESA Energy Efficiency: There is a term that I would like to describe to you called LESA, which stands for Landlord Energy Saving Allowance. If you spend money on any item that helps to reduce energy waste in a property, then these costs are allowable. Items such as double glazed windows (if separate glazing is being replaced), insulation to keep the property warm etc.(3)
  5. Wear & Tear Allowance: You can claim 10% wear & tear allowance on furnished properties. The property will need to have more than just white goods to be considered to be furnished. This means that you will need furniture for people to sleep, sit and to put their belongings. You can claim 10% of their net rent. (4)
  6. Travel: You can claim 45p per mile for the first 10,000 miles and then 25p thereafter when carrying out your property investment activities such as visiting letting agents, networking, seeing the property. (5)
  7. Subsistence: You may be travelling some distance in your property investment work. As such if you are working away from home and you eat food then you can claim this cost as subsistence costs that you incur for yourself. (6)
  8. Mortgage interest: You can claim the Buy To Let mortgage, most property investors will know this. However many people did not realise that they can offset the interest from the mortgage they take out against their own home when investing in property, or even in the interest on loans from banks and joint venture partners.

Applying the treatment

Once you have got a bunch of receipts and kept a track of your mileage then you will need to keep a record of them in the event of a HMRC investigation. Not only that but also using something like Xero will help you understand if your property business is profitable or if you need to make changes. (1)

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