Property Management Fees are Tax Deductible!

Most landlords are aware that they can offset expenses relating to the running and maintaining of their rental property against their tax bill. But not all those who are contemplating letting their property or investing in property for the first time know that agents’ Letting and Property Management fees are also tax deductible.

Below are some examples of allowable expenses you can claim (this list is not exhaustive):-

  • Maintenance & Repairs
  • Gas & Electrical safety certificates
  • Buildings (and contents) insurance
  • Rent Guarantee & Legal Expenses insurance
  • Ground Rent & Service Charges (if leasehold)
  • Travelling expenses
  • Administration expenses
  • Accountancy costs
  • Council tax, water rates (if payable by the landlord)
  • Services & maintenance for communal areas (e.g. Estate Charges)
  • Licence fees for HMO’s (if applicable); and
  • ·Costs of Letting & Managing the Property

Finding a tenant isn’t always easy, and finding the right one can be harder still – so many landlords choose to let their property through an agent. Costs of marketing and letting the property, in addition to referencing and fees for setting up the tenancy agreement are tax deductible, as are the fees incurred if you choose to have your property fully managed by an agent.

Professional management includes (but not limited to) rent collection, arranging and overseeing maintenance, property visits, renewals & annual rent reviews, check-outs and deposit deductions/returns. A reputable agent will keep landlords compliant and up to date with all legislation changes, in addition to maximising their client’s asset.

No more Mortgage Interest Tax Relief

Since April 2020, Landlords have no longer been able to deduct any of their mortgage expenses from their rental income to reduce their tax bill. Instead, Landlords may now receive a tax-credit, based on 20% of their mortgage interest payments. This is less generous than the old system for higher-rate taxpayers, who effectively received 40% tax relief on mortgage payments. The new system was phased in gradually since 2017.

Accountancy Costs are a win-win!

Landlord tax accounting changes and updates regularly, therefore it is often complicated. Buy-to-let landlords have specific tax rules that apply to them. Having a property accountant who is familiar with the industry will be able to provide an invaluable service. A property accountant will also ensure landlords are tax compliant and help them run their business as financially efficient as possible.

Dawn Clarke

Lettings Director

[email protected]

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