10 Tips for new landlords to navigate the rental maze
Sheards Accountants has given 10 tips for new landlords to optimise their tax position…
– Get expert advice:
Seeking expert advice before taking the leap as a landlord will help you find out the pitfalls and ensure you’re armed with the knowledge before undertaking a property purchase.
– Keep accurate records:
The HMRC initiative Making Tax Digital for Self Assessment comes into effect from April 6 2023. Landlords with gross rental income in excess of £10,000 will need to file a digital return every quarter. The right software and record-keeping will be a lifesaver when MTD becomes necessary.
– Maximise your expenses:
This is essential for first-time landlords. Make sure that you are keeping a record of all your expenses in letting the property and know which expenses are deductible.
– Minimise tax:
If you have a spouse, why not consider putting the property into joint names? This is a great way to maximise Capital Gains Tax exemptions on future sales and minimise income tax if you’re in a different tax bracket or personal allowances for one spouse are not being totally used.
– Form a limited company:
First-time landlords could look at potentially setting up a limited company if your intention is to acquire a property portfolio to hold your properties.
– Register for self-assessment:
Ensure that you register with HMRC for self-assessment by October 5 following the end of the tax year in which you start to receive rental income.
– Managing agent:
First-time landlords should consider using a managing agent. All tenant finding fees, gas/electricity checks and repairs are taken care of by agents and this can be a more efficient and stress-free way to handle your property.
– Consider short-term lets:
Letting a property as a holiday let has a different tax treatment (it’s treated as a business instead of an investment) and qualifies for business tax reliefs.
– Create a payment plan to avoid cash flow worries:
Planning ahead to avoid cash flow is a great habit to get into as a first-time landlord.
– Work with a tax specialist:
Working with a tax specialist is key for first-time landlords to make sure you are fully aware and up to date with everything that is required of you as a landlord.
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