01745 586360
Jul 20
Top 5 Accounting Tips for Landlords
The tax rules for Buy to Let Investments are changing but many still see property as an attractive investment at a time of low interest rates and high demand. If you are considering investing in buy-to-let – or improving returns on a property you already own – here’s our Top 5 Tips for Landlords on how to save money:
Tip #1 • Keep meticulous records to help you reduce your tax bills
Regardless of whether a property is profitable, it still needs to be declared on a tax return. Even if it is making a loss, a tax return could be beneficial to you in the long run as any losses can be offset against future profits (by carrying it over to a later year) or against profits from other properties in your property portfolio.
Tip #2 • Budget for tax payments when considering an investment
Put aside about one quarter of your profit from your properties in a savings account each month, so when the income tax bill arrives you have the funds to hand. If you already have substantial earnings from other sources you may need to put aside 40% or 50% of your profits to pay the tax due.
Tip #3 • Speak to someone about what costs you can claim
There are still savings to be made and money to make within the Buy to Let Market. We believe that to be forewarned about changes to tax calculations & tax relief is to be forearmed. Read our Top 5 Ways to Increase your Buy to Let profits or talk to us on 01745 586360 about your own personal circumstances
Tip #4 • Go for yield and consider all costs
Although the greatest benefit of a buy to let is in the future possibility of the property going up in value, the rental yield needs to be considered first and foremost. The yield is the annual rent received as a percentage of the purchase price. For example, a property delivering £20,000 worth of rent that costs £200,000 has a 10% yield. It is important to deduct all other running costs from this profit – Letting Agent fees, insurance, maintenance etc to get an accurate Return on Investment figure.
Tip #5 • Keep abreast of all tax changes
With complex tax changes ahead, both in terms of tax relief breaks and the way tax is calculated, it pays to be forewarned. “Having the right information at the right time will allow landlords to make educated decisions before they are greatly affected, ” explains accountant Clare Porter from Sage & Co Chartered Accountants. “There are many options out there to diffuse the impact from changing to Holiday Lets to remortgaging etc… it’s worth sitting with a proactive accountant to work out what is right for you!”
Contact Sage & Co Chartered Accountants to arrange an informal FREE meeting to chat through your circumstances and to see if we can help you 01745 586360
