Of course, as with all income, you will have to pay tax however you can claim some expenses and reduce your property tax bill. You are strongly advised to seek expert advice from an accountant as rules on tax change frequently.
Allowable expenses may be deducted by landlords.
You can also deduct any allowances to which you are entitled. Below are some allowable expenses a landlord can claim:
- Water rates, council tax, gas and electricity if paid by the landlord
- Maintenance and repairs to the property (but not improvements) contents insurance
- Interest on a mortgage to buy the property
- Costs of services & contractors including the wages of gardeners and cleaners
- letting agents fees
- legal fees for lets of a year or less, or for renewing a lease of less than 50 years accountant’s fees
- Ground rents and service charges
Allowable expenses don’t include ‘capital expenditure’ – like buying a property or renovating it beyond repairs to wear and tear.
Remember that property prices can go down as well as up both in terms of sale price and rental values. You should always seek independent advice and view such investments as long term.