If you have a portfolio of properties and incur expenses then it may not be possible to attribute the cost to a single property. This is because the expenditure may have been for all of the properties.

A good example of this is when purchasing decorating materials for a property. In such circumstances you can either:

• apportion the cost against the properties, or
• have a separate listing of generic expenses to add on at the end when you combine all the incomes and expenditures.

Either way is fine, as it makes no difference to the tax position, though practically the latter option may be easier and simpler to implement.

Storage Costs
A cost incurred by an increasing number of investors is storage costs.

The cost of renting storage space is allowable against rental income. The reason is that it fulfils the principal criteria of “wholly and exclusively”, as the cost was incurred for the purpose of your property business. If you never had rented property then you would not be incurring such costs.

Other Common Landlord Expenditures
Below is a list of other common costs that a landlord will incur that can be offset against the rental income:

• safety certificates, e.g., gas and electrical safety;
• stationery, e.g., stamps, envelopes, books;
• computer equipment;
• bad debts;
• legal and professional costs, e.g., accountancy costs;
• service costs, e.g., window cleaner, gardener;
• furniture/appliance rentals;
• advertisement costs;
• letting agent costs;
• books, magazines, etc;
• security/smoke alarms;
• telephone calls, including mobile telephone bills (but make sure you have an itemised bill to prove the calls made);
• bank charges (e.g., interest charged on property bank account).

You can use property management software to help you track expenditures.

This entry was posted on Tuesday, October 14th, 2008 at 12:08 pm and is filed under Property Companies. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.