You may be a professional buy-to-let landlord, or you may rent out your home as an ‘accidental landlord’ because you need to move out of your home, to trade up or rent somewhere larger. Wh…
You may be a professional buy-to-let landlord, or you may rent out your home as an ‘accidental landlord’ because you need to move out of your home, to trade up or rent somewhere larger. Whatever your situation, make sure you’re aware of your financial responsibilities. Put simply, it is not easy money in the sense so many think it is. As a landlord you need to know your Income Tax and Capital Gains Tax liabilities which go with this in terms of how the process works.
When renting a property, it’s important to be aware of your financial and legal status and what you need to be sure to look out for and be in the know about. Letting out a property is an increasingly popular trend in the UK but it’s important to do this in a wholly legal manner to be safe from breaking the law of being liable to fines. If you’re a landlord, renting out your property to tenants, make sure you know not just your rights but theirs also. When it comes to it in terms of how the process works, main advantage of having a written tenancy agreement is that it sets out your rights and responsibilities.
For any investor who dived into buy to let in 1996 when the market was first established, the rewards will have been ample. From capital appreciation alone, they would now be sitting pretty. The average house price nationally back then was £53,394, according to Nationwide. Today, it’s £167,294, meaning a 213.3% increase. But the problem with any investment is that it means you have to pay tax and many buy-to-let investors – especially the majority of landlords, who have just one property – do not seek specialist property tax advice. In a recent survey of landlords with portfolios of at least 11 properties, 89% of them admitted to being clueless when it comes to tax. This is where you can be bitten from this.
But there’s only so long you can get away with being in the dark. HMRC is looking closely at landlords who have sold properties and appear to have paid no capital gains tax (CGT). The consequence could be fines or criminal prosecution. This too is where and why you need to be in the know of the rules and legal regulations which go with lettings. The taxes you need to look out for are income tax, capital gains tax and last of all, inheritance tax.