When you rent out your property you will be getting money in the form of rent, which is an income source and just like getting profits from a business, rental income is subject to taxation. However, there are many ways through which you can reduce the amount of tax that you have to pay on such property. Here is a look at what these are so that you save money on tax expenses.

Expenses Incurred in seeking Tenants

When you decide to give your property on rent, you need to give adequate advertisements regarding the same. You may have to travel from one place to another for this purpose. Sometimes people fix an agent to get the job done. All such expenses incurred enjoy tax benefits.

Expenses incurred in travelling for Rental Property Requirements

When you rent out property you might have to undertake activities wherein you have to travel to places. For example, you might have to travel from one city to another for finding the right tenants or for speaking to them on any matter related to the house, repair jobs or any thing else. You can total all such travel expenses and use them for tax deductions on rental income.

Loan Payments

Loan taken on property that has been rented can be used to reduce tax payments. When you take out a loan, you would be paying a considerable amount of money towards loan repayment. This includes money spent on interest payments, mortgage insurance premiums, loan repayment for loan taken for property improvement, and much more. You can include all such amounts in tax deductions. 

Maintaining the Rental Property

As a property owner, you would definitely be incurring expenses for activities undertaken to maintain your property. You can use such expenses for tax deductions. Here is a look at what maintenance expenses you can include for deductions.

Repairs

From time to time you would be spending money to repair certain aspects of your home structure as they will get worn out due to weather elements or usage. If your tenant does not pay for such expenses, you can mention them to get tax deduction in the year in which they occurred.

Others

Maintenance activities are not limited to repairs. You may have to spend for activities like cleaning up property, doing the garden and landscape, paying fees for property management, take up services for disposing garbage and much more. All such maintenance expenses can be specified for tax deductions.

Depreciation

With time, as with any property, your rental property will depreciate in value. You can take up deductions on such depreciation based on its extent due to wear and tear. Depreciation is one factor for which you will not be spending any money from your pocket at all, yet you gain the benefit of tax deductions from it. Furthermore, if you have made any improvement on your property structure, these are also subject to depreciation and likewise can be mentioned for tax deductions.

Renting to Businesses

Those who have rented out their property to a business or some commercial interest, that is running a home office from the premises can gain tax deductions on such rental income for expenses such as interest on mortgage, insurance payments and much more.

Gain Tax Deductions on Property Losses

It may sound a bit strange, but the amount of money you pay for insurance on rented property can be used to enjoy tax benefits in the event of loss caused by flood, fire and other natural calamities.

In the event that you have to face tax losses as a result of your property, you can get deductions from such loses by showing your rental income.

Summary

As you can see from the above points, there are many ways to cut taxes on rented property, Make yourself aware of all these tax deduction routes and take advantage of them so that you can bring down tax payments considerably and enjoy more of your rented income every year.

 

If you’ve got money to invest in property, there’s more than one option open to you.

You mostly hear about people buying a house, doing it up and then selling it on or renting it out.

But you could also do the same with property abroad. Or an increasingly popular way to make money is by renting property to businesses.

New research by lenders Mortgage Trust shows more than one in four landlords are looking to get into corporate rents, which includes commercial buildings as well as leasing domestic properties to executives who have moved from other parts of the UK.

At the start of 2007, that figure was just 14 per cent according to its research. Now it stands at 27%.

Much of this growing interest is because you can make more money renting property in this way, especially if you can afford to buy a commercial building.

Businesses tend to demand high standards. And if you can provide, they will pay handsomely for it.

On top of higher rents, a company is much more likely to stay in a building for a longer period of time. If you think how much hassle it is for you to move house, it’s ten times the pain for a business.

When your tenant does move, they are less likely to do a runner than people renting property might do, leaving you with a mess to sort out. This is true for domestic as well as commercial rents. And businesses are more likely to put the building back to the state it was when they moved in.

Some landlords hope that down the line they can sell their investment property to the tenants.

If you are interested in buying a commercial building as an investment, you need to approach it a little differently to when you are renting property domestically.

First off you must look very carefully at the location of your potential investment, and consider the type of business that might rent it from you.

Companies that use warehousing will need excellent transport links, plus lots of cheap space. Whereas a business that has lots of staff and clients visiting the premises will be more interested in a smart looking building and plenty of parking spaces.

The trick is to find a balance between the likely cost of the premises, the features of the building and the location.

Next up you should look at the infrastructure on offer. A building will have more appeal if it has modern network cabling in place, plus a good security system. The building should already have smoke detectors and other safety features such as fire extinguishers, as these are required by law.

One smart tip that will help you maximize your profits from renting property to businesses is to look at how you can make better use of the space you have bought. For example, if you have a tall building, could you install a mezzanine floor to double the floor space available?

Is there wasted space in the loft or associated outbuildings that can be converted? The more floor space you have, the more monthly rent you will get.

It will be harder to do this work if you buy the building with tenants already in. If the building is empty it will be easier, plus you can throw the cost of improvements into any borrowing you are doing to fund the purchase price.

Finally, before you shell out for your building, find a commercial estate agent you trust to work with you as a partner. Not only will they offer plenty of advice on the best way to get a good monthly income from the building, but they may act as a property finder for other businesses – matching renters with tenants.

This could be a powerful weapon for you in marketing your new commercial building, and getting tenants renting property quickly.

Renting Property in Ireland

Landlords in Ireland have the following Rights:

To decide the rent amount payable by the tenant, bearing in mind that the rent charged cannot exceed the current market rate, to receive the agreed rental payment on the date specified in the rental agreement and landlords are allowed to review the rent on an annual basis. The exact details of this should be clearly stated in the rental agreement.

Landlords are also allowed to terminate a tenancy without supplying a reason within the first six months of the tenancy, to be kept informed regarding the person normally resident in the property and be the final arbitrator regarding potential sub-letting.

Also, Irish landlords are entitled to be kept informed of any and all repairs and normal maintenance required on the property and to be given, reasonable access to resolve outstanding maintenance issues.

Landlords are obliged to register the tenancy with the Private Residential Tenancies Board, which now replaces the courts regarding resolution of tenancy disputes and they must supply tenants with either a rent book or a clear statement of rent paid.

Landlords do not have the right, without permission from their tenants, to enter or occupy property covered under a rental agreement. They cannot take property or personal items belonging to the tenant in lieu of outstanding rent or deposits.

To avoid landlord/tenant disputes, landlords should provide tenants with a detailed list of the contents of the house and agreement should be reached as to the condition of the house before the new tenants move in.

Landlords may have to compromise between including enough furniture to enable their property to appear comfortable and ready for immediate occupation, whilst as the same time avoid filling up what may well be a relatively small living area.

Landlords must be prepared to accept a certain amount of unavoidable normal wear and tear in the furnishings and fittings of the house, especially if they are lucky enough to have their property continuously rented out. Tenants, for their part, will need to understand that, in order to present the house properly, the landlord may provide them with items of furniture that should be treated properly.