What expenses can be claimed on a rental property?

Monday, 3 September 2012 10:42 AM

Today's expert is Stefan Elton, lettings manager at Kay & Co.

Q: I have recently acquired a property and intend to let it out, as a first time landlord I am unsure what expenses I will be entitled to claim on a rental property, please advise?

It is certainly true that as a landlord you are entitled to claim for specific expenses incurred on the rental property.

Firstly the interest accrued on any loan taken out to purchase the property is claimable; arrangement fees paid to brokers in arranging a loan are also allowable.

If it is a repayment mortgage, then it is only the interest element which can be claimed, not the total repayments. You can include bank charges if you have a separate account.

Any reasonable repair work carried out on the property can be claimed provided that it is not a capital improvement.

As a result of tenant occupancy a 10 per cent ‘Wear and Tear Allowance’ is calculated on the rents receivable less any charges that the landlord incurs, which would normally be the obligation of the tenant e.g. water charges. However, no actual expenditure on furnishings or fittings is eligible for relief.

As a landlord, do not forget to claim safety certificates like the gas safety and the licence fee for ‘Houses of Multiple Occupation’.

Likewise, any legal fees in connection with the renewal of a lease, a shorthold tenancy of less than one year, eviction of clients, rent collection or management fees and accountancy, and also the premium for the buildings and/or contents insurance.

If you experience a void period where you pay the rates and council tax then this is claimable. So too are any service charges or any other services in connection with the letting e.g. lighting in common areas.

Travel costs you incur as a result of travelling to the property to carry out maintenance or deal with issues tenants may have also qualify as claimable expenses.

Also deemed claimable is postage, stationery, telephone calls and other administration expenses. If the property is managed by you, you could also claim for using your house as an office.

Do remember that this is not an exhaustive list and you should always seek the advice of an accountant who specialises in rental property tax returns.