There are many expenses that landlords are either required to pay or use services to improve their property, such as cleaning services, tenant agencies, repairs or letting agent frees.
You can only deduct expenses that are considered ordinary and necessary in the line of business:
Ordinary Expenses- Are “common and accepted” within your industry. For example, an ordinary expense for a landlord could be paying a contractor to fix something broken within the rental property.
Necessary Expenses- Are “helpful and appropriate” to your business. For example, a necessary expense for a landlord could be advertising costs, paying for a service to find tenants or utilities.
General maintenance and repairs to the property. You cannot, however, claim improvements/renovations on your property such as replacing a laminate kitchen worktop with a granite worktop.
Water rates, council tax, gas and electricity
Insurance, such as landlords’ policies for buildings, contents and public liability
Costs of services, such as yard maintenance or cleaners.
Travel expenses: landlords are allowed to deduct certain local and long distance travel expenses that are business related.
Home office: If you have a section in your home that you use as an office for your business you may be eligible. How much you can claim will depend on how much space in your home you are using.
Letting agent fees and management fees
Legal fees for lets of a year or less, or for renewing a lease for less than 50 years
You can also deduct 'replacement of domestic items relief'. The government lists a number of examples of what domestic items qualify for this new relief. These includes
Replacement crockery or cutlery
Replacement fridges, washing machines etc
But you need to remember that if you are replacing a bed that was £400 but you bought a bed that was £600, then you will only be able to claim that £400.
When you have new tenants moving into your property the total relief you can claim is £200 for curtains + £250 washing machine + £50 to dispose of old washing machine + £400 for a new bed, which amounts to £900.
If you are a landlord with a portfolio in negative equity and feel there is no way out, call one of our experts at Landlord Debt Advisory and get your free consultation today!