💼 Understanding Landlord Tax: A Guide for Property Owners
Navigating the tax landscape as a landlord can be complex. At David Clarke Estate Agents, we assist landlords in Herne Bay and Whitstable to comprehend their tax obligations, ensuring they make informed decisions about their property investments.
Whether you’re letting a single property or managing a portfolio, understanding the tax implications is crucial. Here’s an overview of key tax considerations for landlords:
- Income Tax – Rental income is subject to income tax. Landlords can deduct allowable expenses, such as property maintenance and letting agent fees, to reduce taxable income.
- Mortgage Interest Relief – Relief on mortgage interest is now restricted to a basic rate tax credit of 20%. This change affects the profitability of buy-to-let investments.
- Capital Gains Tax (CGT) – When selling a rental property, landlords may be liable for CGT on the profit. The rate and allowances depend on individual circumstances.
- Furnished Holiday Lettings – Properties meeting specific criteria can qualify for different tax treatment, but changes are forthcoming. From 6 April 2025, the furnished holiday lettings regime will be abolished, aligning their tax treatment with other residential properties.
- Ownership Structure – Owning property jointly or through a company can impact tax liabilities. It’s essential to choose the structure that aligns with your financial goals.
Additionally, landlords should be aware of the upcoming Making Tax Digital (MTD) initiative. From April 2026, landlords with income over £50,000 will need to comply with MTD for Income Tax Self-Assessment, using compatible software to keep digital records and submit tax returns. Those earning over £30,000 will be included from April 2027.
At David Clarke Estate Agents, we understand the importance of staying informed about tax obligations. Our team in Herne Bay and Whitstable is here to provide guidance and connect you with trusted tax professionals to ensure your property investments remain profitable and compliant.
For personalized advice on managing your rental property’s tax responsibilities, reach out to our estate agents in Herne Bay or estate agents in Whitstable.