It is important that you are aware of what records you must keep when calculating the profit and loss for your property business.  Read below to find out more.

Rent and other receipts

You should make sure that you keep a record of all income from the property business including gross rents that are received before deductions.

You should also keep receipts from ground rents, property management fees and letting agent fees.

Deposits

A deposit can be taken by a landlord to cover the cost of any potential damages caused by the tenant.

If the property is let on an assured shorthold tenancy, the deposit must be kept in a tenancy deposit scheme.

If the landlord does not return the deposit to the tenant at the end of the tenancy, they must declare it is as income.  But, if the landlord returns any balance that is left over after the services and repairs are made, then this will be excluded from the income.

Jointly owned properties

If you have a property that is owned by two or more people, then it is important that the profit and loss is shared between the owners correctly.

If the joint owners are married or in a civil partnership, all of the profits and losses will be shared equally, even if the property is owned in unequal shares.

If the joint owners are not married or civil partners, then profits and losses are shared in accordance to the ownership shares, unless an alternative split has been agreed.

Overseas rental properties

If you have both UK and overseas rental properties, it is important that you keep them as separate businesses.

You should make sure that you keep proper records so that income and expenses are allocated to the correct property rental business.

Losses which arise on an overseas let cannot be offset against profits of a UK let and vice versa.

Furnished holiday lettings

There are different tax rules that apply to commercial furnished holiday lettings. If a let qualifies as a furnished holiday let, it must be separate from UK lets that are not furnished holiday lets.

Record keeping

It is essential that you keep good records of your income, so that all sources of income are recorded and allocated to the correct rental property business.

Further Actions

Make sure that you keep all records of income from your rental property, so that your profit and loss are calculated correctly.  It is worth following the advice above to ensure that your property income is correct.

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