Investment Property Advice and Rental Accounts
Experts in Accounting and Tax for rental property including buy to let
We offer the following services, tailored to meet your needs:
Rent a room scheme
Tax on sale
Read some of our blogs below which are specifically for owners of rental properties.
HMRC – Airbnb Data Warning!
By way of a brief background, Airbnb hosting has become extremely popular in recent years, with an increasing number of landlords using Airbnb as an easy platform to let their property, whether it’s their main home, or a buy to let property.
Having seen a surge in popularity, renting a property on Airbnb has been seen as a lucrative way to potentially enhance rental income opportunities, however HMRC believe many landlords may not be fully aware of their obligations and responsibilities to correctly disclose this source of income, to the appropriate tax authorities.
With Airbnb now making this information available to HMRC, we suspect that in turn HMRC shall use this data to launch a new wave of tax enquiries, resulting in many homeowners and landlords, who use Airbnb, becoming subject to a formal tax enquiry. This may result in an individual facing retrospective tax liabilities, and penalties for non-disclosure.
Here at Turpin Barker Armstrong we are happy to help, and should you wish to discuss the above, or perhaps you may know someone who may require assistance with their own tax affairs in this respect, please do not hesitate to contact us, or pass on our details.
It’s always advisable to be proactive with tax matters instead of risking tax penalties further down the line, and we have a dedicated team of experts who are happy to offer advice and guidance to help you.
If any of the above information applies to you, or if you know of any family or friends who could benefit from our expert tax advice, we can be contacted on the usual office number, 0208 661 7878, or via email, firstname.lastname@example.org
We can arrange to see you in one of our socially distanced meeting rooms at our office, speak on the telephone or even via a virtual meeting such as a zoom or skype. We are here to help and offer a free initial consultation at your convenience.
Changes to property reliefs from 6th April 2020
Firstly, if you rent out a property following a period of occupation you can currently claim lettings relief, when working out your capital gains tax liability, and the reduction could be up to £40,000. However from 6th April 2020 this relief will be restricted to periods where the owner was in shared occupancy with the tenant. It is estimated that this will effect around 40,000 people.
Secondly, the final period exemption for private residence relief is being reduced to 9 months from the current 18 months. However there is not a change for disabled people and those who go into residential care where the final exemption period will remain at 36 months.
Changes to both these rules will affect the amount of capital gains tax you will have to pay on disposal of a property after 6th April 2020 so if you need further information please give us a call or get in touch via our contact us form on our website.
These changes do not affect landlords of buy to let properties who have never lived in the properties that they have rented out.
Rental Property Dilemma
Individuals that lived in a flat and then met up with the love of their life and together purchased a bigger marital home sometimes chose to retain the old flat as an investment property to generate a small income and hopefully grow in capital value.
HMRC and the government have launched an attack on the principle private residence relief that has always been available to taxpayers to mitigate the taxable gain on properties that they have lived in previously as their main residence.
A few years back the HMRC restricted the final three year PPR exemption regardless of the use, to 18 months and now they are proposing to restrict further to only the final nine months covered by the PPR relief.
Another tax break for CGT on main residences has been the letting relief that is only available if a tax payer has as sometime occupied the property as his or her main residence. In a nutshell a gain on a property accrues evenly over the period of ownership regardless of perhaps the fact that the main increase in value may have occurred over a short period of time.
Therefore a gain of £100K over a ten year period would be seen as £10k per annum. So if you lived in the property for four years and rented it for six years then currently 5.5 years or 55% of the gain will be covered by PPR relief.
The letting relief provided further relief from the CGT because you had a further discount on the assessable gain that was the lower of the gain attributed to the letting period, the gain attributed to the PPR period or £40K.
So in the example given above the gain of £100K is discounted by PPR relief to the tune of £55K and letting relief of £40k leaving a chargeable gain of £5k that is further mitigated by the annual exemption for CGT of £11,700. Ie no taxable gain.
However the bad news is that the recent budget is proposing that letting relief is scrapped from April 2020 leading to a potential capital gains tax liability on the example given above of perhaps £11,400.
Therefore careful consideration is required as to whether you should sell or retain your investment properties.
How to find a good property accountant?
If you are involved in buying property to let – accountants can assist you with tax-related work and make sure you pay the least amount of tax possible on buy-to-let or holiday homes. A good accountant will also help you consider your overall approach to wealth management, estate and income planning, to maximise your overall position from owning property and other assets.
So you do need a good accountant – some questions to ask in finding one:
· How long have you been practising?
· Are you a property specialist/have you got experience in this area?
· Can you please give me a written quote with a full cost breakdown?
· What cloud software do you use (for property accounts) and how do I upload data to you?
· Do you bill for phone calls and e-mails or are they included in the service?
· Are you willing to set a job rate as opposed to an hourly rate?
Typically we advise on the following:
· Recent changes to mortgage interest relief and stamp duty
· Restructuring arrangements
· Capital Gains Tax planning/ER relief/roll over
· S24 and spousal tax planning
· Incorporation and/or use of trusts
· Dealing with HMRC property tax enquiries and investigations
· Considering longer term inheritance tax planning
· Dealing with all compliance issues
· Tax planning and support for families involved in buy to let businesses
· Non resident landlords
· Tax on Airbnb (rent a room exemptions)
· Furnished holiday let’s
As you can see – it is quite a bit and can be quite complex – hence you need an expert.
If preparing property accounts we use QuickBooks & can work with you to make data upload simple and effortless (no more bags of receipts or losing things).
Give our property team a call on 020 8661 7878 or come in for a property related chat