How to maximise your buy-to-let profits.

The buy-to-let market is flourishing, especially in areas where lots of people want to live and work, such as London and the South East. Other investments (such as bonds) are not producing the returns they have in the past and interest rates are still at an all-time low of 0.5% above base rate, so savvy investors are expanding their buy-to-let empires, figuring that bricks and mortar is the way to go.

However, while investing in buy-to-let property can be very profitable, it’s key to remember that it’s a business and the profits are taxable. The good news is that you can minimise the tax you pay perfectly legally.

Here’s a reminder from rent guarantee specialists, Assetgrove of what you can offset against your declared profits:

Mortgage fees and interest

Both mortgage fees and interest are tax deductible and these can be claimed back in the year you arranged your mortgage. If you’ve an interest-only mortgage then obviously your whole monthly repayments will be tax deductible. This is why lots of landlords ensure that their property is mortgaged even if they can afford to pay it off!

Insurance premiums

You can offset insurance against tax, such as contents cover, home emergency, rent guarantee insurance. On average, you’re likely to pay £200 a year on a typical low-risk buy-to-let property.

Maintenance and repairs

Money you spend ensuring the property remains in a good state for tenants, is tax deductible. This includes wear and tear on items such as furniture (this is 10% of the rent annually, minus costs you pay on behalf of the tenant – like council tax). You could also claim the cost of replacing furniture in the property – but not for the cost of furnishing in the first place. Other tax deductibles include general repairs, such as: painting and decorating or replacing the roof. However, improvements such as renovations and extensions, are not included.

Ground rent and service charges

Leaseholders pay ground rent to the freeholder and service charges every month to pay for the block of flats. Charges include cleaning, maintenance, heating and lighting; as well as security or concierge staff – and sometimes there are major works bills. These are deductible from your tax bill.

Council tax and utility bills

Both of these can be offset against tax (as long as you’re paying them) and you can claim these whole costs whether the property is void or not.

Others

You can also claim the cost of advertising your property, expenses in travelling to and from your properties, along with things such as your subscriptions to property magazines and running your home office.

We hope that these tips have helped, just remember to hire an accountant to help you with your bill as it makes thing much easier.

Alex Evans

You May Also Enjoy

how to present your property for sale
Breaking News

These are the property hotspots

These are the property hotspots bucking the SDLT deadline price slide Last week, the latest UK House Price Index from the Land Registry revealed a sharp 3.7% monthly drop in average UK house prices during April 2025, following the expiry of temporary stamp duty support at the end of March. Further analysis by eXp UK,…
Read More
Breaking News

Demand rebounds for Prime London property

Big ticket buyers returned to the capital in the spring months, the Prime London Demand Index from London lettings and estate agent Benham and Reeves has revealed. Between the first and second quarters there was a 1.8% uplift in ‘demand’ for homes between £2 and £10 million, which is calculated based on the proportion of…
Read More
Breaking News

Failing to refinance could see portfolio landlords hit with a £23,000 hike to mortgage costs

The latest research by specialist property finance expert, Rangewell, has revealed that buy-to-let portfolio investors who fail to take the appropriate action when it comes to refinancing could see their monthly mortgage costs climb by over £23,000, rather than a £8,500 reduction due to improvements to the mortgage landscape. Rangewell analysed the average amount owed through…
Read More
to let sign 2025
Breaking News

Section 21 Is Set to Go – What This Means for Landlords

By Allison Thompson, National Lettings Managing Director, Leaders The Renters’ Rights Bill is making its way through the House of Lords and, if passed in its current form, will bring major changes to how tenancies are ended. One of the most significant proposals is the abolition of Section 21, often referred to as the ‘no-fault…
Read More
Breaking News

Are falling mortgage rates fuelling a rise in buy-to-let investment?

By Sarah Thompson, Managing Director, Mortgage Scout The latest data from UK Finance shows that in the last quarter of 2024, the average buy-to-let (BTL) interest rate for new mortgage loans taken out was 5.09%, a drop of 0.61% on the previous year. And it seems that falling mortgage interest rates may well be having…
Read More
Breaking News

New survey reveals it now takes over 200 days to sell a home in the UK

The average number of days to sell your home in the UK now stands at 205 – the first time the 200-day mark has been broken. The longest time to sell is in inner London and the South-East at 222 days, closely followed by outer London at 221 days. The North-East is the best performing…
Read More