Buy to let flats.


M

mick

Does anyone know if the owner or the tenant is responsible for paying
council tax, service charge, water rates. Does the letting agent take
a percentage of the rent being paid every month? Can these expenses be
set against tax liabilities.
 
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B

Bart

Does anyone know if the owner or the tenant is responsible for paying
council tax, service charge, water rates. Does the letting agent take
a percentage of the rent being paid every month? Can these expenses be
set against tax liabilities.
My experience is that rent for a complete house or flat doesn't
include council tax or water rates, or consumables such as power or
metered water. These are paid by the tenant on top of the rent. Unless
you want to kindly include them..

And yes the agent takes a percentage (10% to 15% last time I asked,
but it depends on the service offered), plus VAT, out of the rent the
tenant pays.

For the tax, presumably you pay that on any profit you might make
after the agent's fees. Although I don't know whether the cost of
owning the property (mortgage etc) is an allowance expense, I have a
feeling it might be. I know allowable expenses would be things like
repairs and maintenance, but not improvements.

You can probably call any letting agent and ask these basic questions.
And the tax office can tell you about allowable expenses on letting.

Don't forget to factor in the cost of having the property empty while
looking for, or in-between, tenants (although if you were to take
every possibility into account, you would never let any property)
 
D

David Woolley

Bart said:
For the tax, presumably you pay that on any profit you might make
after the agent's fees. Although I don't know whether the cost of
owning the property (mortgage etc) is an allowance expense, I have a
This question came up a month or two ago. I believe the opinion, with
respect to mortgages, was that interest is allowable but capital
repayment is not.
 
M

mogga

Does anyone know if the owner or the tenant is responsible for paying
council tax, service charge, water rates. Does the letting agent take
a percentage of the rent being paid every month? Can these expenses be
set against tax liabilities.
Are you asking as a tenant or a landlord?

tenants - MSE have a forum for renters
and landlords - try landlordzone or somewhere

Unless it's a HMO then the tenants are generally liable for council
tax.

Service charge - landlord
water rates - tenant

Some letting agents take all the rent and fail to pass it on. Vet them
as well as the tenants.

See your accountant for advice on tax issues.
 
M

mick

Are you asking as a tenant or a landlord?

tenants - MSE have a forum for renters
and landlords - try landlordzone or somewhere

Unless it's a HMO then the tenants are generally liable for council
tax.

Service charge - landlord
water rates - tenant

Some letting agents take all the rent and fail to pass it on. Vet them
as well as the tenants.

See your accountant for advice on tax issues.
--http://www.freedeliveryuk.co.ukhttp://www.holidayunder100.co.uk
Thanks, I live in a block and we are considering buying cash, and
then subletting a flat in the same block..Just wanted to know what
the, bottom line is likely to be.
 
R

robgraham

mick said:
Does anyone know if the owner or the tenant is responsible for paying
council tax, service charge, water rates. Does the letting agent take
a percentage of the rent being paid every month? Can these expenses be
set against tax liabilities.
All costs of ownership, and this includes the mortgage interest (not capital
repayments), agent's fees, repairs (but not capital improvements), are tax
deductible.

Rob Graham
 
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R

Ronald Raygun

And don't forget insurance.

If they provide a full or partial ongoing management service, then
yes, they usually do. But some agents also offer a different kind
of service, namely a tenant-find only, and in this case they charge
a one-off fee, typically equivalent to about six months' worth of
management percentage.
All costs of ownership, and this includes the mortgage interest (not
capital repayments), agent's fees, repairs (but not capital improvements),
are tax deductible.
Remember there is a scheme available called the wear and tear allowance.
This allows you to deduct 10% from your rental income if it's a fully
furnished rental. But obviously if you opt for this then you cannot
then also deduct the cost of repairs to or replacements of any items of
furniture or contents (basically anything movable, including appliances).
But repairs to (and replacement of) fixtures and fittings (lamps,
fitted kitchen units, baths etc, and probably fitted carpets too, but
not movable rugs) and the building itself (walls, doors, windows)
remains deductible.

Actually capital payments and improvement costs are also tax deductible,
but not from income, only from gains.
 
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J

Jonathan Bryce

mick said:
Does anyone know if the owner or the tenant is responsible for paying
council tax, service charge, water rates. Does the letting agent take
a percentage of the rent being paid every month? Can these expenses be
set against tax liabilities.
Usually, for a House in Multiple Occupation, the landlord is responsible for
all of those costs. For a self contained flat or house, the landlord is
responsible for service charges and the tenant is responsible for council
tax and water rates. If the property is empty, then the landlord is
responsible for all these costs.

The expenses can be deducted from income, and the balance used in
calculating your tax liability.
 

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