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Landlords missing tricks on tax relief
Many landlords are paying more tax than they need to, according to property experts.
Under the Government’s Rent a Room scheme, anyone can earn earn up to £4,250 a year tax-free by letting a furnished room or rooms in their own home.
Another area often missed is making the most of tax relief on mortgage interest payments.
Although there is no tax relief for mortgage interest paid on a main residence, there is 100 per cent relief on a mortgage attached to a rental property. So, someone who has a £100,000 mortgage on their home and a £20,000 mortgage on a second property they let, is better off switching the larger mortgage to the second property, so they can claim more tax relief.
Christina Nawrocki, of Oxford-based Wellers Accountants, said: “It’s worth maximising the mortgage on your rental property.
“If you transfer £50,000 of your personal mortgage to a rental property mortgage at a rate of six per cent, it could save a higher-rate tax payer £1,200 a year.” Landlords can also offset against tax costs such as gas safety certificates, buildings insurance, accountants’ fees, repairs and maintenance plus 45p per mile for any mileage incurred while looking after the property.
Darren Hazell, of Headington-based letting agents TLC, added: ”Renting out a property is classed as a business or investment, so you can claim tax relief for things such as materials and mileage.
“Anybody who is not claiming what is due is missing a trick as it can save them an awful lot of money.”