Almost everyone pays taxes—as a citizen of this country, you’re expected to fulfil this responsibility so that you can enjoy public goods and services. When speaking of taxes, you may only be familiar with the deductions on your salary that help fund government spending, but that’s not all there is to it!
Most people are obligated to pay taxes, but each has different rules and conditions they have to adhere to. The world of taxes is big and wide, and not everyone earns money the same way. With the different forms of generating income, there are as many tax rules for every circumstance.
Of course, while renting out a property, you have to pay tax to the government, but not in the way you know. As a landlord, the tax rules you have to follow will be quite different from that of a salaryman.
The Complexity of Property Taxes
Being a landlord means having more responsibilities than an ordinary employee. Although renting out a property business is an excellent way to generate profit, the financial obligations involved with this type of business, specifically tax matters, can discourage anyone from going through with this endeavor in the first place.
Nobody likes dealing with property taxes, but unfortunately for you, you’re obligated to do so.
Property taxes can be quite confusing for you. However, cheap tax return accountants can help you to handle your taxes effectively and efficiently.
What To Know About Tax Rules for Landlords
It’s perfectly normal to have a challenging time figuring out the different tax rules, especially regarding the responsibilities a landlord needs to uphold. Paying your fair share of taxes may seem like an impossible task, as getting a grasp of capital tax gains, stamp duty, corporation tax, and other expenses seems impossible.
Although making mistakes can spell disaster, don’t worry! Our guide below will help you navigate your way through property taxes so that you can manage your business with ease.
1. Rental income isn’t the only thing subject to tax
Rental income is automatically added to any other income you get and is taxed at income tax rates. However, did you know that rental income isn’t the only thing you have to worry about, tax-wise?
When it comes to paying for taxes as a landlord, you’ll also have to consider the services you provide to your tenants. For example, the amount you pay to professional cleaners, expenses for utility bills on behalf of the tenants, and the remaining deposit will also be recorded as taxable income.
2. You don’t have to pay income tax on all generated revenue
Although various services are subject to tax, this doesn’t mean you’ll have to pay income tax on all revenue to manage to generate. Landlords are entitled to certain tax relief, so you can deduct some expenses from your rental income as long as they were incurred as part of maintaining the property.
Some of the expenses that you can deduct are:
- General repairs and maintenance
- Water, gas, and electricity expenses
- Council tax
- Interest on the property mortgage
- Accountant’s fees
- Wages of hired help and other services
- Household costs
Keep in mind that landlords are not entitled to pay taxes on all the generated revenue. For further details, contact landlord accountants in London.
3. The rental income tax rates are different for every landlord
The taxes you have to pay will differ from other landlords, as different variables can affect it. Make sure to hire a cheap landlord accountant to help you work out your income to determine how much tax is due.
Hardly anyone likes to deal with taxes, but as a landlord, you can’t ignore it. Paying the right amount of taxes is crucial to ensuring that your business can run smoothly for the years to come. As long as you work with a skilled accountant in London, you’re sure to be financially stable and tax compliant!
Are you having trouble filing your taxes while renting out a property at the same time? Then, let our team of expert and experienced accountants help you! For over 40 years, we at Cheap Accountants in London have provided tailored accounting and taxation services to individuals and small and medium-sized businesses. Connect with us to learn more!