List of allowable property expenses

Increasing your income by renting out property is a great idea – just don’t forget to pay tax on that rental income.

What you might not know is that you can increase your after-tax profits by claiming property expenses.

What are the common allowable expenses?

Anything can be claimed as long as it relates directly to renting or maintaining the property:

• Letting agents’ fees, legal fees
• Rent, ground rent, and service charges (such as cleaners wages)
• Gas, electricity, water, and other utilities

What if I renovate my property?

It depends:

• Are you repairing the property (like replacing doors, windows, etc.)? Then these costs can be claimed.
• Or are you making improvements (like adding extensions, fitting in a new kitchen and layout, laying out a new patio, etc). Then these cannot be claimed against rental income but can instead be claimed against capital gains when the property is sold.

What if I live on the property?

Then the expenses must be apportioned accordingly.

For example, if it’s a two bedroom flat and you live in one while renting out the other one, then most expenses can be claimed up to 50%.

You might also be eligible for the £7,500 Rent a Room allowance.

Can I claim the interest on my mortgage?

Yes, mortgage interest can be claimed, but not mortgage repayments.

However, rules are changing, so read our guide to mortgage interest relief changes to understand how it works.

How about the domestic items relief?

Until recently, landlords could claim up to 10% of the annual rent by using the flat “wear and tear allowance”. This has now been swapped with the replacement of domestic items relief.

Basically, you can claim anything spent on replacing things like:

• Furniture
• Crockery
• White goods

Two things to remember:

1. This relief only applies to the cost of a replacement, not an upgrade.
2. This relief doesn’t cover items purchased in order to furnish a property or room for the first time.