Tax Deductions & tax breaks for Landlords: What You Need to Know Don’t miss out on potential tax deductions for landlords. There are many landlord tax breaks available, but you need to know how to claim them to obtain the best possible savings on taxes. It is important to know what is tax deductible for landlords. Our comprehensive guide on landlord tax deductions will help you to maximise your rental income and offset against what you can from your tax bill. What are the basics of tax deductions and tax breaks for landlords? As a property tax accountant with my own portfolio of properties across the UK and abroad, I understand that the subject of landlord tax deductions can be daunting for many property investors. I am fortunate to have a team of property tax experts who save me significant amounts of money each year through landlord tax deductions and landlord tax breaks. They can do the same for you, too. When it comes to understanding what is tax deductible for landlords, there are key considerations to bear in mind. Renting out property involves paying for a wide range of associated costs and expenses. For tax purposes, you can claim back many such costs as allowable expenses which you can deduct from your rental income to reduce your tax bill. It is important to take advantage of all the landlord tax deductions available in order to maximise your rental income. For an expense to be allowable by HMRC, it must result wholly and exclusively from renting out your property. You cannot claim personal costs, such as the cost of a carpet cleaner for your personal home as well as your rental property. If you used a mobile phone for business and personal reasons, you can claim allowable expenses for the percentage of costs created from making calls relating to business usage as a landlord. You claim for allowable expenses by listing them in your Self-Assessment tax return, together with your rental income and other sources of taxable income. Landlord tax breaks are available on legitimate expenses. Are you a landlord paying too much tax? I understand that as a landlord you do not want to pay more tax than you need to. My property tax team work with thousands of UK landlords to help them minimise their tax liability from their rental income. Working out the correct rental tax deductions is a vital part of this. My team ensure that landlord tax breaks are in place for all clients. Landlords can claim the expenses of running and maintaining their property. If the rent you charge covers services like council tax or water, you’ll need to count the rent you charge the tenant within your income but you can claim the costs you pay as an expense. Landlords can pay less tax by claiming for allowable expenses, such as: water rates, council tax, gas and electricity landlord insurance costs of services including the wages of cleaners and gardeners if this is part of the rental agreement letting agency fees accountancy fees rents, ground rents and service charges direct costs such as phone calls, stationery and advertising I recommend that you carefully review your expenses to ensure you are making the most of potential landlord tax breaks. You can also claim some of the interest on buy-to-let mortgages. Landlord tax relief on mortgage payments is an important area where many landlords are paying too much tax. I recommend that you also read this article I have written on Section 24 mortgage relief. It is also worth reading this information from HMRC on how to work out your rental income when you let out property. What is tax deductible for landlords? It is important to understand what is tax deductible for landlords so that you can minimise the amount of tax you pay to HMRC. Allowable expenses for landlords include: property maintenance and repairs (such as replacing windows or roof tiles) redecorating between tenancies building, contents and public liability insurance utility bills if you pay them and not your tenant bookkeeping fees vehicle and fuel costs cost of disposal of old furniture and electrical appliances It is also worth remembering that maintenance and running repairs can be claimed as allowable expenses for landlord tax breaks. Replacing a shower, bath, washbasin or toilet is classed as allowable because they are classed as repairs as long as you replace like-for-like. Improving a rental property by adding an extension or a loft conversion cannot be claimed as an allowable expense. HMRC consider these activities to be making a capital improvement because upgrading, adapting or enhancing a property increases its value. You cannot gain landlord tax deductions for the cost of replacing furnishings or equipment in your rental property. If your rental property is furnished or part-furnished, you may be able to claim Replacement Domestic Items Relief for replacing sofas, beds, carpets, curtains, white goods, crockery and cutlery as long as the quality is similar but not superior. Landlord tax deductions can be a complex area to navigate but with the right property tax advice, it is possible to significantly reduce your tax bill. This is vital, especially when it comes to gaining rental tax deductions. What you should do next The income tax basic and higher tax rate thresholds were frozen as a result of the Covid-19 pandemic and will still be frozen for the tax year 2023-24. There will not be any income tax changes to be aware of. When tax bands are frozen, it can push some landlords into a higher tax band as they earn more. While it may be tempting to read this article and do nothing, the cost to you could be significant in terms of unclaimed rental tax deductions and missed opportunities to claim landlord tax deductions. I advise you to book a time here today with my expert property tax team and start making the most of tax rental property deductions.