With house prices decreasing, more and more people are choosing to rent their properties until the market picks up. We have compiled a list of some of the most common questions about renting your property and tax returns:
Do I have to do a tax return if I am renting property?
If your profit from rental property is over £2,500 in the tax year, you will need to complete a tax return. If the rental income is below £2,500 and you are employed, you can contact your local tax office to adjust your PAYE tax code and you will not need to complete a tax return.
What are allowable expenses for renting a property
If you rent a property you can reduce your tax liability by offsetting any allowable expenses. These could include:
- letting agent’s, and lawyers/legal fees
- building and contents insurance costs
- loan interest
- maintenance and repairs -improvement costs are not allowed
- rent, ground rent and property service charges
- Council Tax
- advertising your property to rent
- other costs such as phone calls
How do I group my rental property expenses?
If your income for property rental is below £15,000 a year before any expenses, you can group them all as a single total on your tax return. If your expenses are above £15,000 you will need to group them separately and complete the full tax return.
How long do I need to keep my rental property records for?
Make sure that you keep any records relating to your rental property tax return for 6 years after the tax year for which it was due, whether you completed a tax return or not.