Buy To Let - What is Tax Claimable?

blackice_2

Is there a list on here somewhere of what you can claim against on a Buy to Let Propery...

ie if interest only mortgage is it true you can claim against the lot?

Decorating, but not increasing value of house?

Thanks

keepthereceipt

1. water rates, ground rents and council tax unless tenant pays.
2. mortgage - interest only, not any capital repayment.
3. normal repairs and decorations but not improvements or additions.
4. bills such as gas and electricity unless tenant pays.
5. management expenses such as accountant fees, tenancy agreement set up or renewal fees, legal advice fees, associated phone bills, cost of rent collection, cost of preparing and checking inventories.
6. insurance valuations and premiums
7. any estate agents fees if they are finding a tenant ie setting up a tenancy agreement or renewing one, advertising costs
8. cost of any services you provide such as cleaning, gardening
9. any travel costs exclusively incurred in the inspection and management of the property.
10. wear and tear - if let fully furnished then choose either a renewals basis, ie the cost to replace items but not anything improved or added or choose the waer and tear basis and assuem 10% of the rent pa less any council tax, water or utility bills or other services you pay that would normally be paid for by the tenant.

I use the 10% rule because it is so much easier to manage.

Hope this helps.

keepthereceipt

I think you need to clarify this with an accountant because it all depends on whether you had a legally enforceable agreement with your partner.

If you didn't and it was just a casual arrangement, then I think it highly unlikely that the Inland Revenue will accept any of it. You need a proper agreement that sets out the loan, terms of repayment, interest, how the capital element is repayed, what happens in the event of a default - ie much like a mortgage.

If you want to ask an accountant, please pm me and I'll email you details of mine.

garysletters

As you say she had no intent of charging interest, then you are onlyu paying back capital, so even if it was an acceptable "loan" then you would not be able to claim tax relief.

Best thing may be to get a mortgage (or remortgage as you already own it), and pay off your wife in full with this money, then she can earn interest in a bank, and you can claim the interest you pay as tax deductible.

The exact benefits/cons will be easily explained by an accountant depending on your exact circumstances.

blackice_2

THanks keepthereceipt
for the great info...

I like the 10% rule for renewal, so if I furnished a place from scratch I could say charge that against tax, but thereafter (the year after) I would take 10% off my rent i.e £480 PA and get that tax free?

Is the tax man ok with this sort of thing or would they need to see receipts?