What Tax Expenses Can Ayr Landlords claim against?

https://youtu.be/5gZwc3Eu77s

A guide for Ayr landlords to declaring their rental income in the best way possible and what you can claim against.

If you rent out a property and receive a rental income from that, you must declare it. You have to pay tax on any profit. It doesn’t change your employment status to ‘self-employed’ though, as it’s considered an investment.

Of course, HMRC can be more complicated than a day at Hogwarts. The best advice will be to seek professional advice from an accountant but we’ve picked out some key points to start you off.

Start hoarding

HMRC unimaginatively call this ‘record keeping’. Be disciplined and keep receipts, bank statements, invoices, rent books, even mileage logs, so you (or your accountant) can easily make the deductions against your tax bill. This means you get to keep more of the profit away from ‘the tax man’ in a legal and ethical way, of course.

Expenses claims

There are a range of other allowable expenses. They are deductible only if they’re exclusively for renting out a property and if you pay for them yourself. This could include:

  • Water, council tax, electricity, and gas
  • Insurances
  • Services of, for example, cleaners or gardeners
  • Accountancy fees
  • Ground rents
  • Service charges

Maintenance and repairs

The definition from the gov.uk website is: ‘A repair restores an asset to its original condition, sometimes by replacing parts of it’.

If the property requires new guttering after a storm, this would be considered a repair and therefore, a deductible expense.

However, if you wanted to improve the guttering for another reason, like changing the colour, this would not be allowable.

Improvements are not an allowable expense, like replacing a laminate kitchen work surface for granite. The exception to this is updating things to their ‘nearest modern equivalent’. This could be things like changing single-glazing to modern, double-glazed windows.

If you replace an item with an upgrade, then you can claim the cost as if you had replaced like-for-like. Take the work surface example: a 2m length of laminate would be £150. The same size granite work surface could be £600. You could claim the £150, not the £600.

Domestic item replacement

Furnishings like carpets and curtains are likely to be able to be deducted, as long as you’re replacing like-for-like. Beds and free-standing wardrobes, or other items that can be considered ‘movable furniture’ are also deductible. Appliances, such as TVs or fridge/freezers, and even smaller items, like cutlery and crockery can be offset against your income.

Partial expenses

If you’re letting a property that you have a mortgage on, you can’t deduct the full amount of the mortgage payment. You can only offset the interest element of the mortgage repayment against the income. Similarly, if you use your car for a purpose related to the rental property, you can only deduct the vehicle running costs for that particular purpose. This includes mileage rate deductions.

For rental opportunities in Ayrshire, get in touch with us on 01292 442888. I specialise in Lettings and Lettings Legislation and can help you consider the market and the best options out there for you.

COPYRIGHT Parkview Property 2022


Are You a Landlord or a Property Investor in Ayr

Are you a Landlord or a Property Investor? What’s the difference? Aren’t they the same thing? Does one rent out properties and the other sell them on? If these questions have got you scratching your head, read on.

Keeping it simple, a landlord makes a regular income from renting properties to tenants. They are responsible for maintenance and managing the property. It’s also likely that they hold onto the property for the long term.

A property investor is trickier to define. It might be someone who buys buildings they can add value to before selling on, or someone that invests in other people’s property ventures, not getting involved in the actual build or refurb.

Hands-on vs hands-off

A private landlord has got a lot to do. Once they’ve bought, financed, and refurbished their rental property, they enter the wonderful world of lettings. And while many landlords use our agency to find tenants and manage their property (the easiest decision in my humble opinion), many choose a more hands-on approach. So, they manage the property, taking care of tenant enquiries, emergencies, or repairs.

Being a landlord can be a full-time job, depending on the number of properties and tenants they may have.

A property investor takes more of a back-seat role. For example, they may be part of a joint venture or involved in an equity partner agreement. This is where they put up the capital and other parties do the work.

Property investors with access to a large amount of money may take more indirect routes to their investments such as property funds or trusts, buying shares in large development companies or property ISAs. In each instance, they commit their cash, rather than their time.

Regular income vs one-off payments

A private landlord looks for a good rental yield as a stable and relatively low-risk property investment. They receive monthly rental payments that should cover mortgage costs and could (hopefully) supplement their income. Over time, if they sell their rental property, they may also benefit from price appreciation. Nowadays, many private landlords regard property as an alternative to a traditional pension.

Property investors buying buildings to ‘flip’ or develop look for a one-time payoff once they’ve sold the property.

I deal with both, therefore If you’re interested in becoming a landlord or investing in property, call me on 01292 442888


How to Winter-Proof Your Rental Property

We look at how landlords in Ayrshire can make sure their rental investments stand up to the challenges of winter weather.

With winter officially only a few weeks away, the time is now ideal for landlords to take steps to ensure their properties are prepared for whatever December to February serves up.

By putting a winter property maintenance plan in place, you’re setting yourself and your tenants up for a trouble-free winter period.

Begin with boilers – The best time to service a boiler is in September, ahead of it being plunged into constant action in the months that follow. The second-best time to service a boiler is right NOW. By keeping on top of boiler and heating maintenance, you’ll save a lot of money and avoid hassle in the long run.

Remember your radiators – Bleeding your radiators is a simple, yet effective way of ensuring they are working as well as they should be.

Look at lagging – Frozen pipes that burst are the stuff of nightmares for any serious landlord. So, take the time to ensure pipes are wrapped in lagging to reduce the risks of freezing and potentially bursting.

Go to guttering – Don’t wait until the weather turns before you clean out your gutters. Blockages can build up over time and slowly cause unseen damage.

Insulate everywhere – Insulating a loft is an excellent way of keeping the warmth in and the heating bills lower. But don’t forget that even insulating against draughts can be a small way of making a big difference to how warm a property feels.

Fix that fence – The stronger seasonal winds love claiming a poorly maintained fence as one of its victims. So, act now to ensure any weak spots in your fencing are ready to stand up to whatever the winter winds throw at it.

Check it out – If your property is vacant for any sustained period over the winter months, diarise weekly or fortnightly visits to it to keep an eye on things. If you can’t do this, then it’s the kind of thing a good, local letting agent can do for you.

Your rental property is an asset, and having happy tenants is a key part of making the most of it, so take the time and spend the money on creating a safe, comfortable home for them this winter.

And don’t worry if you’re not a Handy Andy or a DIY Diana. At Parkview Property, we have good working relationships with maintenance people who can do all the work for you.


The Pros and Cons of Investing in Property with a Friend

In this two-minute read, we ask if it’s wise to buy a rental property in Ayrshire with a mate.

Purchasing a buy-to-let property with a friend is an appealing prospect – on paper, at least.

But it’s important to carefully weigh up the risks and rewards before taking the plunge.

Here’s a list of the pros and cons of becoming a landlord with a friend.

The pros

  • The role of landlord comes with a plethora of responsibilities. Sharing these duties with a trusted friend will lighten the load.
  • Your co-investor may have a different skill set to you, meaning you can play to your strengths while they play to theirs.
  • Most lenders require larger deposits for buy-to-let mortgages. Splitting your investment means you don’t have to pay as much cash up front.

The cons

  • You never really know someone until you’ve gone into business with them. If the two of you disagree on how to manage the property, the friendship could suffer.
  • If your tenant falls into arrears, as landlords, you’ll have to stump up the cash. However, if your investor buddy can’t pay their share for whatever reason, you’re liable for the shortfall.
  • You might be on the same page as your friend right now, but people’s circumstances change. Further down the line, your friend may decide that they want to sell up when you don’t, or vice versa.

Tips

If you’re still keen to invest with a friend, here’s how to mitigate some of the risks.

Get a good lawyer 

You need a legally binding agreement that states:

  • How much each party is investing
  • The ownership split
  • Responsibilities regarding bills and maintenance
  • What happens if one or both parties want to sell
  • A dispute resolution mechanism should you disagree on an issue

Get a will

In some cases of co-ownership, if one party dies, the property automatically goes to the other person unless otherwise stated in a will.

Don’t feel pressured

If your friend thinks a formal agreement is unnecessary – they may see it as a sign that you don’t trust them – politely, but firmly, pull out of the deal. 

Without the right paperwork in place, you risk getting caught up in a protracted and messy dispute later on. 

Going ahead based on a wink and a handshake could cost you the friendship and much more if things don’t turn out according to plan.

For more advice on investing in the buy-to-let market, contact me, Janice Molloy at Parkview Property 01292 442888


HOME MOVERS - HAVING SECOND THOUGHTS?

Whether You’re Buying Or Renting in Ayr, You’ll Regret Not Reading This … Probably

In this two-minute read, we look at avoiding regret when it comes to buying or renting a new home.

We’ve all had it – that gnawing sense of buyer’s remorse when we’ve made a purchase.

It could be the make of that new car you’ve ordered. Or the colour of that dress that looked good online, but will it have a wow factor when the delivery driver drops it off?

Or something as simple as ordering a dish in a restaurant that you suddenly wish you hadn’t as your friend’s requested meal sounds infinitely more appetising.

On a more serious (and expensive note), according to research by insurance company Aviva, over a quarter of people who bought a home during the pandemic now have some regret linked to it.

It was either the cost, location, or the property itself that created the nagging feelings of doubt.

The good news is the risk of buyer’s or renter’s remorse can be reduced by following these nine simple steps.

  1. Have a realistic budget and stick to it.
  2. Work out what you want from a home and what you actually need.
  3. Think ahead, will this home be providing what you need in five years’ time?
  4. Consider all the moving costs like removals, storage, legal fees etc.
  5. Consider any commute time, transport links, and even broadband speeds.
  6. Research the area if it’s new to you. The steps below are worth following.
  7. Consider speaking with people who already live in the area you’re looking at. If you’re brave enough, knocking on doors in the neighbourhood and asking direct questions can be priceless and very revealing.
  8. Jump on social media and ask in Facebook (other social networks are available) community groups what the area is like to live in.
  9. Speak to me. As a local property expert, I’ll give you an honest opinion on areas and the types of property you’re interested in.

And remember, it’s natural to have second thoughts about something as big as moving home – so don’t beat yourself up about it. But by taking a little more time and applying some more research, you’ll be more confident and comfortable about moving.

I’ve been helping people in Ayrshiremove home for more than 17 years and having a chat with me is something you won’t regret.

Call me on 01292 442888


Parkview Property Sends a Big Well Done to GB’s Brilliant Paralympians

In this two-minute read, we look at the amazing achievements of our Paralympians.

The word ‘inspirational’ gets thrown around a lot these days, but when it comes to our Paralympic heroes, there really is no other way to describe them.

The grit and determination they displayed in Tokyo provided a much-needed reminder that human beings can do incredible things when they set their minds to it.

We could all learn lessons from this remarkable bunch of people about staying positive, working hard and not quitting. (Useful lessons if you’re moving home, but also for life in general.)

Here are three GB athletes who epitomise the Paralympic spirit.

Micky Yule – From Scotland, stepped on an explosive device while serving with the Royal Engineers in Afghanistan and lost his legs. After undergoing 21 operations to stabilise his injuries, Micky felt ‘good for nothing’ – until he threw his energy into powerlifting.

After years of hard graft, Micky qualified for the Paralympics and this year, won bronze in the men’s 72kg category after lifting a whopping 182kg.

Ellie Robinson – Ellie, who won gold in Rio, finished fifth in Tokyo in the S6 50m butterfly final. In a heartfelt post-race interview (check it out on YouTube, it’ll have you welling up), she explained why the result was ‘a story of triumph, not of defeat’.

In the run-up to the games, medical experts told Ellie to quit swimming due to a worsening hip condition called Perthes disease.

But Ellie pushed through the pain and made it to the final because she wanted to finish her sporting career ‘on her own terms’.

Dame Sarah Storey – The Queen of the Track and the Road, Dame Sarah has won 17 gold medals and is Britain’s most successful Paralympian.

Incredibly, she’s competed at eight Paralympic Games over a 29-year period – and hopes to be a contender in Paris in three years’ time.

The 43-year-old mum-of-two started her career as a swimmer; she won two golds in the pool in Barcelona at the age of 14.

When an ear infection forced her to take time away from swimming, Dame Sarah discovered the joys of cycling – and became a champion on the bike, too.

If you enjoyed the Paralympics, let us know your favourite performance from Tokyo.


Pros and Cons of Different Types of Tenants in Ayrshire

Landlords! Finding the Right Tenant for Your Ayrshire Property is Half the Battle

In this three-minute read, we talk about three types of tenants and the pros and cons of each.

Currently, the UK rental market is booming, with landlords finding tenants quicker than ever according to Rightmove, and demand for rentals up 3% from last year. As a landlord, this is great news, so why not maximise the opportunity by finding the perfect tenant for your Ayrshire property.

Families

As the most common type of tenant in the UK market, is your rental family friendly?

Pros: Families tend to rent for the long term and once they’re settled, they often stay put. This is a massive plus, as a long lease requires minimal input. A typical family tenant will also be keen to furnish the property themselves, saving you costs and hassle.

Proximity to a school – especially one rated Good or Outstanding by Ofsted – can boost demand for your property and command a higher yield. Similarly, if your rental offers outside space and is close to shops, you’ll see a surge in interest from the family sector.

Cons: With families comes the potential for more wear and tear. This means you’ll want to make sure your property is finished to the highest quality to protect against damage. You’ll also want to ensure that any repairs are dealt with quickly.

If a family is on a long lease, they will make the home their own by hanging pictures, decorating children’s rooms and so on. So, at the end of a tenancy, you can be pretty sure your rental property will need a spruce up.

Professionals

Often regarded as the dream tenant, working professionals want proximity to transport links or their place of work.

Pros: With professionals comes the stability of a secure rental income and less chance of arrears – a huge bonus for private landlords. Less wear and tear and reduced potential for noise makes working professionals the crème de la crème of the rental market.

Cons: Just because they’ve got a good job when they move in, you can’t guarantee your monthly rent without some sort of rent protection. As the last 18 months have taught us, jobs can easily be lost, and financial situations can change quickly.

Students

Typically, students have a bad rental reputation, but is this a fair conclusion?

Pros: If a rental property is located near a university, you have the option of renting a property room by room – maximising your rental yield.

With most students receiving some sort of finance to support their studies, your rental income is safe with a reduced risk of arrears. You may also have the backup of the ‘bank of mum and dad’ just in case funds run low.

Cons: Unfortunately, lots of students means lots of partying and could lead to a higher risk of damage. There’s also a chance that maintenance issues may not be reported promptly. You can also expect a high turnover of tenants as the academic year is only around 10 months. This means more admin, advertising, and a need for end-of-tenancy problems to be resolved quickly.

For more advice about what type of tenants are attracted to rental properties in Ayrshire, contact me. My name is Janice Molloy from Parkview Property 01292 442888