Are you paying too much tax on your rental income?
Many landlords are aware that they can claim certain tax expenses on their rental properties. These include mortgage interest, lettings agent’s fees, accountants’ fees, council tax and buildings and contents insurance.
However, it is also possible to claim the cost of maintenance and repairs to your rental property. Our guide explains what you can, and cannot, claim.
All properties need repairs from time to time. You may have to call in a qualified plumber to repair a fault to the boiler, repair a broken window or fix the floorboards. Any essential repairs to the property are classed as a tax expense and you can deduct these from your rental income when you calculate how much tax is due.
Make sure you keep a record of the cost of these repairs. Whilst they will be totalled when you complete your self assessment tax return, when you claim tax back for repairs to a rental house you may be asked to provide evidence of the work.
It is also possible to claim tax expenses relating to services that are provided to the property. For example, services such as cleaning or gardening are classes as an allowable expense and you can claim these accordingly.
Every property needs general maintenance from time to time. You may find that you have to paint the interior or exterior of the property, creosote the garden fences or retile the bathroom.
Sometimes the maintenance that is needed can be more significant, such as a new window or door or replacing the conservatory.
Any general maintenance that you do to the property is classes as an allowable expense. However, you need to be sure that the work you are carrying out is maintenance and repairs and not an ‘improvement’.
You are not allowed to claim the expenses of making improvements to your rental property. HMRC consider an ‘improvement’ to increase the value of the property, and so will not allow you to claim the cost.
For example, if you wanted to replace an old, leaking conservatory, this would probably count as a ‘repair’. However, if you wanted to add a conservatory to the house, this would be classed as an ‘improvement’.
Sometimes there is a fine line between repairs and improvements. Upgrading windows when you are repairing them (from wooden to uPVC, for example) may still be classed as an ‘improvement’. It is always worth checking first with HMRC to determine whether the work you are undertaking can be claimed against your rental income for tax purposes.