Tax Planning Tips For Landlords

Tax Planning Tips for Landlords

While planning to become a successful buy-to-let landlord, you have to take several things into account. One of the most important factors that get overlooked mostly is tax efficiency. Applying some wise tax saving strategies can be tedious yet rewarding as it will help you reduce your tax bill and save you some cash.

Here is a list of 5 tips for landlords that will help them handle tax efficiently and significantly reduce your tax bill.

Extend Your Property

By extending your existing property you can avoid the hefty amount of stamp duty charges. Recent development rights state that you can extend your existing property more than you could earlier.This will not only raise the value of your portfolio but also increase your monthly income. However, you should keep in mind that any major renovations or an overhaul which can lead to increased occupancy may subject you to the new modified HMO rules. From October 2017, it has been a rule that a property that has more than 5 tenants should have HMO license. To acquire this license you just not have to pass the necessary checks but also have to incur the costs. So, before taking on some big renovations or building work, check with the local council’s licensing rules to avoid the change of your rental property’s status.

Transfer Your Assets

A simple way in which you can avoid the Capital Gains Tax is by transferring your assets to your spouse. If your spouse’s tax band is lower than yours you might as well have to pay less tax on your rental income. Further, if there is no mortgage attached with the rental property or if you are not taking any financial help from the asset you have transferred, then you can also easily avoid the stamp duty, thus helping you to potentially cut down on your tax bill.

Choose Short term Lets

There are ways to lower your tax bill if you are in between tenants. Costs such as utilities and council tax can be claimed during this period. When there is a void period you can consider taking in short term tenants to keep the money coming in.

Set Up A Limited Company

Although it might require a lot of planning and effort, setting up a limited company can greatly reduce your tax bill as a landlord. Not only you will be able to buy a new property through the new company but also you can employ people to manage your properties. If you can pull this off, your savings can be enormous.

Take your Expenses Into Account

It is very important that you claim every expense you are entitled to. A lot of landlords lessen their tax bill by simply being aware and diligent about their expenses. It is advisable that you carefully keep every receipt with you and find out what exactly you can or cannot claim. All the landlord expenses like having a home office, agent’s fees and others can be offset against your profits.

If you are looking for a tax advisor or an accountant who can tell you what other expenses you can claim for and how, we are here to help. At CoreAdviz, we offer advice and tax claim service for you to help your rental business flourish.