Allowable expenses for landlords?

Clarita

(Also posted in "Cutting Tax")

Hi,

Me and my boyfriend are in the process of buying a leasehold flat. We are buying with a residential mortgage but the plan is not to move in straight away but rent it out for a year. This will let us save up to re-decorate before we move in. We will be informing our mortgage lender of this when we start renting it (and are prepared to pay a fee to them).

I am self-employed and starting to fill in my first tax return and I was thinking what we would be able to claim as expenses.

I know we can claim the interest on the mortgge, but not the morgage itself. Other than this I'm not sure. Can we claim the costs associated with buying the flat (solicitor, survey, mortgage broker fee, etc). Also, do we each have to file a tax return for this or can we do a joint one?

Thanks.

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terryw

Clarita wrote: »

(Also posted in "Cutting Tax")

Hi,

Me and my boyfriend are in the process of buying a leasehold flat. We are buying with a residential mortgage but the plan is not to move in straight away but rent it out for a year. This will let us save up to re-decorate before we move in. We will be informing our mortgage lender of this when we start renting it (and are prepared to pay a fee to them).

I am self-employed and starting to fill in my first tax return and I was thinking what we would be able to claim as expenses.

I know we can claim the interest on the mortgge, but not the morgage itself. Other than this I'm not sure. Can we claim the costs associated with buying the flat (solicitor, survey, mortgage broker fee, etc). Also, do we each have to file a tax return for this or can we do a joint one?

Thanks.

Take care here as you could be in bother with the mortgage company if it is not a buy-to- let. They just might not agree, fee or no-fee.

Those costs associated are not reclaimable against Income Tax, but keep them as you may be able to use them for Capital Gains if you are liable when you sell.

Assuming it is in joint names you should each declare one half of the rent in your tax returns.

terryw

moneysavinmonkey

i don't understand your plan - why are you buying now in order to save money?

How are you any better off than just staying renting and watching house prices fall?

ps: are you sure that you will make any profit??

EdInvestor

Clarita wrote: »

I know we can claim the interest on the mortgge, but not the morgage itself. Other than this I'm not sure.

Apart from mortgage interest the main expenses are:
Agent's fees
Service charge, ground rent,buildings insurance
If let furnished, 10% wear and tear is allowable
Repair costs (but not replacement, that comes off capital gains)

Can we claim the costs associated with buying the flat (solicitor, survey, mortgage broker fee, etc).

No

Also, do we each have to file a tax return for this or can we do a joint one?

If yu jointly own the property the rental income and expenses should be apportioned 50:50 and any tax payable or refund shared on the same basis.

There's no such thing as a joint tax return.

Clarita

moneysavinmonkey wrote: »

i don't understand your plan - why are you buying now in order to save money?

How are you any better off than just staying renting and watching house prices fall?

ps: are you sure that you will make any profit??

We live in London so unfortunately prices are not falling. We live at my parents' at the moment so pay very little rent but getting to old for living at home and really need our own space. Wat with the costs involved in buying, we'll have used a large chunk of savings so with rent covering the mortgage payments, we'll have year to save for re-decoration.

We're not out to mak profi, just end up with a nice flat!

moneysavinmonkey

which part of London are you in...

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/counties/html/county37.stm

moneysavinmonkey

Clarita wrote: »

We live in London so unfortunately prices are not falling. We live at my parents' at the moment so pay very little rent but getting to old for living at home and really need our own space. Wat with the costs involved in buying, we'll have used a large chunk of savings so with rent covering the mortgage payments, we'll have year to save for re-decoration.

We're not out to mak profi, just end up with a nice flat!

you need to be in it to make profit otherwise you are just subsidising someone else living in a flat whilst you live at home with your parents!! You'd be better saving the money and putting down a bigger deposit in a years time.

Fred1_2

moneysavinmonkey wrote: »

which part of London are you in...

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/counties/html/county37.stm

Hmm, that website says that, in my town, terraced houses have increased by 23% in the last quarter and 31% in the last year. Flats are up by 21.5% and 13.75 respectively. Semis have fallen slightly in the last quarter but are still slightly up on the year. The detached houses have taken the big hit, falling by 11% in the quarter and 2.4% on the year.

Owning a flat and a terraced house, i'd love this to be true, but I'm taking it with a big pinch of salt.

Clarita

moneysavinmonkey wrote: »

which part of London are you in...

http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/counties/html/county37.stm

Where I live and am buying (Ealing), flats have risen by 3.9% in the last quarter and 17.1% in the last year. You can see wy I don't just want to "just staying renting and watching house prices fall". If we ever want to be able to afford to buy a home I think we're right to take advantage in this slowdown right now.

neverdespairgirl

Clarita wrote: »

We live in London so unfortunately prices are not falling.

Um. Prices certainly are falling in London, it seems to me.

moneysavinmonkey

Clarita wrote: »

Where I live and am buying (Ealing), flats have risen by 3.9% in the last quarter and 17.1% in the last year. You can see wy I don't just want to "just staying renting and watching house prices fall". If we ever want to be able to afford to buy a home I think we're right to take advantage in this slowdown right now.

don't forget the bbc data is for October to December ... educated guess would suggest they are now falling since the market conditions have worsened even more since then.

Yes they rose 18.5 last year, but that is last year! Have you seen the news recently, that is no danger of that kind of house price inflation in 2008!

The latest release from the land registry suggest prices fell by 0.3% in Ealing last month. link

Perhaps you are right and I am wrong but just be aware of what you are getting yourselves into is a big risk. If house prices continue to fall you may very well be stuck with a flat you can't sell, and can't afford to live in, that you have to subsidise your tenants rent and are subsequently unable to get another mortgage to buy your own place.

If you simply stay put with your parents you can save the maximum amount of money (no buying costs, landlords insurance, furnishings, EPC certificates, repair/maintenance, voids, services charges, etc. etc) and be in a much stronger position to buy in 1 years time.