With the 31 January deadline for filing 2008-9 tax returns fast approaching, landlords and the self-employed can cut their tax bills with a range of property expenses.
* Costs that buy-to-let landlords can offset include: mortgage interest (not capital repayments) on the property; buildings and contents insurance; managing agents’ fees; utilities that the landlord provides to tenants; advertising spend; and repairs and maintenance (but not property improvements). Building work that is “disallowed” for income tax purposes can be used to cut a capital gains tax when the property is sold.
* Where a tenant lives with you, you can take up to £4,250 of rent tax-free under the Rent-a-Room scheme.
* Self-employed people who work from home can offset a proportion of their phone, internet and utility bills against their earnings. In many cases, they can also make deductions for furniture, decoration and repairs for the room they work in.
* Such tax breaks are also available to regular employees who do self-employed work from home.
* Self-employed people who own their homes should generally not claim for mortgage interest or council tax, as this could trigger a CGT bill when they sell the property. But those who are tenants and work from home can offset a proportion of their rent and council tax.