Tips For Landlords: How to Keep Track of Your Expenses

As a landlord, do you have a strategy for managing your rental expenses?

Every landlord needs to find a way to do this, searching for the way that works best for you.

You may hand the responsibility over to an accountant or outsource some aspects to an accountant while managing everything else yourself. Perhaps you’ve been waiting for an opportunity to master the art of digital accounting, keeping track of all your receipts, invoices, documents and transactions that way?

If you’re a new landlord and feel you could benefit from a bit of guidance in this area, read on. Here are our tips for landlords on how to keep track of rental property expenses.

Tip 1: Know your property expenses

Understand your rental property expenses. This will put you on the right path to investment success. You need to know what your outgoings and expenses are compared with the amount you might receive in rent.

The main expenses will fall under tax, mortgage, and insurance. If necessary, seek advice from a financial adviser and accountant. You could also consult your letting agent for guidance on aspects relating to property.

Tip 2: Know what expenses you can claim for

You need to know which expenses are allowable – and which are not. For example, you can’t claim expenses on items that don’t relate to your lettings business.

You can claim for certain expenses, which means you can reduce your tax bill. Some of the expenses you can claim include:

• Contents Insurance
• Water, gas and electricity
• Council Tax
• Service charges, ground rent
• Letting agents’ fees
• Legal fees

However, you cannot claim expenses for anything classed as capital expenditure, such as buying the property or doing work that adds to its capital value (for example, an extension). You should keep a record of all relevant expenses.

Please note: the rules are different for what can be claimed for residential properties than for holiday lets.

Tip 3: Always keep receipts and request invoices

Always keep receipts for your rental property expenses. Keep files and label those files in such a way that you know how to find the right receipt easily should you need to at any time. If you deal with contractors, always request an invoice and keep that on file too.

Tip 4: Stay tuned with new legislation

From changes to mortgage interest tax relief to the discontinuation of the wear and tear allowance, multiple tax changes have been introduced in recent years which impact landlords in the UK. A financial advisor or accountant would be able to help you here, as this will affect your expenses and tax payments.

Tip 5: Find an expenses tracking system or software that works for you

Once you know what is an allowable expense and what is not, you’ll need to make sure you keep track of all your expenses. And as we said before, you’ve got to find a system or software that works for you.

The buy-to-let business is so much more than letting a property to tenants and drawing a monthly rental income. You’ll need to know how to manage your expenses while keeping a record of all receipts relating to your lettings business for when you come to fill in your tax return.

If you need guidance from a letting agent in the Tooting, Streatham, Clapham and Balham areas, our team can help you. Book a free valuation today to get the ball rolling.

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