In this video, Samuel sits down with Courtney and Richard from Gorilla accounting to discuss the secrets of saving on tax as a property investor. In this interview, we answer the exact questions that you need to know as a property investor when it comes to taxation. Please watch the full video (above) until the end as it contains important information that every landlord should hear.
Paying less tax isn’t about being sneaky or breaking the rules. The government has set up the tax system to reward certain actions and discourage other actions. If you do the things that they want you to do, you pay less tax. In this article, I will summarise some of the questions answered in the video. Please share this article on social media to help spread financial education to your friends and family.
What expenses can you claim as tax deductible?
There are a lot of things that can be claimed as expenses on your tax return. These include: travelling to the business; repairs and maintenance; cleaning costs; accountancy fees; the cost of gas certificates; letting agents fees and legal fees. You can even claim for training courses that relate to your business, such as the property training that we offer.
On the other hand you can’t claim for improvements to your property, as these are classed as capital expenses. Replacing existing items like-for-like is still tax deductible however. You also can’t claim on the interest on a mortgage if you own the property as an individual, but more on that later.
Should you invest via a limited company or on an individual basis?
If you buy a buy-to-let property in your personal name you won’t be able to claim the interest payments as tax deductible, aside from a 20% tax credit. However, if you buy via a limited company, you can claim interest payments as tax deductible. If you operate as a limited company, you will have to file both yearly accounts and corporation tax reports on top of your normal self assessment tax return.
If you already own properties in your personal name and want to transfer them into a limited company, this can be harder. You would need to sell the property to the company and pay stamp duty and legal fees. Seek individual tax advice from a qualified professional before making any decisions.
What are the tax advantages of holiday lets?
There are a lot more things that can be claimed for with holiday lets. For example, getting the property up to standard to be let out could be covered by capital allowances. These allowances apply if the property is both available for holiday letting for 210 days and let for 105 days or more in the relevant year.
Call Gorilla today on 03301079678 and mention Samuel Leeds for a FREE initial conversation. Gorilla Accountants are Samuel Leeds Ltd's preferred supplier and look after the accounts of many of our students. Please note that they do not work for Samuel Leeds or look after his personal tax affairs.