BTL investors under scrutiny from HMRC
Profits from BTL properties are increasingly coming under close scrutiny from HM Revenue & Customs (HMRC) which suspects some buy to let investors are underpaying their tax bills.
HMRC is now running a Let Property Campaign to encourage landlords to come clean, or risk higher penalties. Although HMRC is on the lookout, buy-to-let is well designed as a tax efficient investment that can help to keep the size of an investor’s tax bill to the minimum.
In order to enjoy the tax efficient benefits available through buy-to-let, investors need to be fully aware of the different and legitimate ways available to save on their tax bill. There are some simple steps that buy-to-let investors can take to maximise their tax reliefs and allowances from their properties.
Claiming mortgage interest against their tax bill – the higher the mortgage taken out on a buy-to-let property, the higher the relief available
Claiming tax relief on 10% of their rental income every year to cover depreciation in the value of furnishings (but not fittings such as kitchens or bathrooms)
Owning the property in the name of a spouse without a regular income means a couple can take advantage of previously unused personal income tax allowances.
Stephen Ludlow, Chairman of ludlowthompson, says:
“Buy-to-let investments enable investors to deduct costs like interest payments on mortgages, professional adviser fees, and contents insurance from their tax bill.
Using an accountant is a great way to ensure that all documents and figures reported to HMRC are correct as they are also going after landlords who have filed inaccurate tax returns. The added benefit of using an accountant is that their fees are also a tax deductible cost.”
Article courtesy of Property Reporter