Keeping Records for Landlords

Today marks the tax return deadline for anyone handing in a self-assessment tax return for last year, and if you haven’t done it by now you need to get on to it quick or you can expect a fine in the post! Each year it seems like it’s a struggle to get tax done and often that’s because landlords don’t keep the sort of records they should. As a small landlord with just a property or two, what type of accounting should you be doing and what records should you be keeping?

Income and Expenditure

In essence, every type of transaction comes down to either income or expenditure. Rent is income, repairs are expenditure. You should keep a record of every rent payment you receive from your tenants and every item you spend, whether that’s for new light bulb or a new rental agreement. You should also source these items and make sure you know where you got the number; is there a bank statement, a receipt or an invoice you can use to prove that you spent that much?

Unusual Transactions

For lots of landlords there are transactions in a year that don’t fit neatly into the category of ‘rent’ or ‘repairs’. For example, say you claimed on your rent guarantee insurance and were awarded proceeds in lieu of ordinary rent. This does count as income and you should record it but remember to record exactly what the transaction was, so when you suddenly see a strange number for ‘rent’ in next year’s return, you know where it came from.

Property Sales

One thing that is quite tricky to account for is property sales. The profit you make on the sale of any property does count as income again, but it is in most cases what is known as a ‘capital gain’. This means there may be additional capital gains tax to pay and you can deduct this before paying income tax. There is plenty of online guidance available for capital gains tax, but it’s always wise to seek advice if you’re unsure.

Keeping records is important and even if you don’t know exactly how to account for something for tax purposes then just write it down. If it gets to the stage where you need to call in an advisor at least they will be able to make sense of your transactions!

Address to a Haggis

Address to a Haggis

Fair fa' your honest, sonsie face,

Great chieftain o' the pudding-race!

Aboon them a' ye tak your place,

Painch, tripe, or thairm :

Weel are ye wordy o'a grace

As lang's my arm.

The groaning trencher there ye fill,

Your hurdies like a distant hill,

Your pin wad help to mend a mill

In time o'need,

While thro' your pores the dews distil

Like amber bead.

His knife see rustic Labour dight,

An' cut you up wi' ready sleight,

Trenching your gushing entrails bright,

Like ony ditch;

And then, O what a glorious sight,

Warm-reekin', rich!

Then, horn for horn, they stretch an' strive:

Deil tak the hindmost! on they drive,

Till a' their weel-swall'd kytes belyve

Are bent like drums;

Then auld Guidman, maist like to rive,

Bethankit! hums.

Is there that owre his French ragout

Or olio that wad staw a sow,

Or fricassee wad make her spew

Wi' perfect sconner,

Looks down wi' sneering, scornfu' view

On sic a dinner?

Poor devil! see him owre his trash,

As feckless as wither'd rash,

His spindle shank, a guid whip-lash;

His nieve a nit;

Thro' bloody flood or field to dash,

O how unfit!

But mark the Rustic, haggis-fed,

The trembling earth resounds his tread.

Clap in his walie nieve a blade,

He'll mak it whissle;

An' legs an' arms, an' heads will sned,

Like taps o' thrissle.

Ye Pow'rs, wha mak mankind your care,

And dish them out their bill o' fare,

Auld Scotland wants nae skinking ware

That jaups in luggies;

But, if ye wish her gratefu' prayer

Gie her a haggis!

Landlords can turn to letting agents for support

Over-burdened landlords should turn to letting agents for support, according to Savills.

The real estate services provider told the Henley Standard that 'accidental landlords' have become commonplace in the rental sector.

This is due to people being unwilling to sell property in the current market, or relocating to work abroad but wanting to retain a residence in the UK.

Some of these new landlords may struggle with the demands of managing a rental property and turning to a letting agent could help to ease the burden.

Savills offers a rent receipt service, which means it will chase and collect rent on behalf of a landlord.

This can be included as part of a full property management service or on its own.
It has been estimated that there are around half a million accidental landlords in the UK.

Many of these people may be unaware of the legal implications that come with renting out a property, such as needing to notify their mortgage lender before putting the property on the rental market.

More landlords investing, says ARLA

The latest market data from the Association of Residential Lettings Agents has revealed an upward trend in landlord investment.
 
The average number of buy-to-let properties owned by landlords peaked at eight in the final quarter of 2012, up from seven at the beginning of the year.

The apparent rise in confidence in the market also prompted increased landlord activity, with 29% stating they have bought a property in the past year compared to 25% a year ago.
 
The rise in landlord confidence is also reflected in the jump in value of buy-to-let mortgages, with an 8% increase in the final quarter of 2012 totalling £4.2bn, according to the Council of Mortgage Lenders.

Ian Potter, managing director of ARLA, said: “The latest data suggests that landlords are carefully but concertedly increasing their portfolios.”

Landlords scheme 'farcical': Tories

Nearly £18 million has been spent on a landlord registration scheme which has seen just a tiny fraction of landlords struck off, figures obtained by the Conservative Party have revealed.

Around 100 landlords have had licences refused or revoked in the last five years, just 0.05% of the 200,000 applications since the scheme's inception.

Only 11 landlords have been reported to the procurator fiscal for serious breaches in the last two years.

Landlords have paid £11.2 million in fees, while the start-up Scottish Government grant for the scheme was £5.2 million.

Annual running fees for the website since 2006 are estimated to be just under £300,000.

The Conservatives said the figures demonstrate that the scheme has been a costly failure, but the Scottish Government said it was not designed to prosecute landlords but to provide reassurance for tenants.

Tory housing spokesman Alex Johnstone said: "This farcical programme, introduced with the best of intentions, is failing to deliver at a tremendous cost to the taxpayer.

"And responsible people with aspirations to get into the property business are being hit in the pocket because of this inadequate scheme.

"The private rented sector is playing an increasingly important role in delivering solutions to housing need in Scotland, and we need a robust an efficient mechanism to help achieve that.

"These figures suggest that, at the moment, the Private Landlord Registration Scheme is not it."

DOWNSIZING - CAN IT LEAD TO A BETTER LIFE!

You look around inside your dwelling one-day, and realize that this place is ROOMY. Previously, all that space used to not seem so much a luxury as it was a necessity. A separate room for each of the kids so Suzy didn’t have to fight over closet space with Amy, and Brian could brood solo listening to his teenage angst-riddled music on blast.

Sure, at one time you used to relish all that space and the calm it created, but now having three bathrooms suddenly doesn’t seem all that appealing. Throw in the issue of practicality and you’re having an urge to change your living space. There are various reasons you may be on the verge of a big move- or shall I say, small move, and there are different avenues to explore to determine whether this really is the best option for you.

Time

Ask yourself; do I really use all this space anymore? Perhaps you find yourself enjoying more extra curricular activities away from the home now that the children are older, and you have more free time on your hands to lead that social life you’ve been missing out on all those years. Maybe you’ve rediscovered your love for traveling and don’t see the point of having a huge dwelling sitting vacant while you’re away.

Downsizing is a step towards the lifestyle change you are now craving. Factor in the time and manpower that goes into simply maintaining a large home; cleaning and yard maintenance are no easy feat, and it may not sit well with you to have to maintain such a space when you aren’t even home enough of the time to enjoy it.

Expense

Obviously, a larger space translates into a larger expense. The larger the square footage of a house and the larger the property it resides on, the greater the cost of ownership will be. The maintenance of a larger space is also more costly, creating a more expensive environment to surround yourself in. Downsizing your living space will also lead to a reduction in utilities and hydro, property taxes, and possibly even insurance.

Cash Flow

Lower expenses generally translate into a positive cash flow, meaning you have more money coming in than you have going out. This can lead to a nice little savings account, or extra pocket change to participate in the activities you wish to involve yourself in. In terms of downsizing to a condo, the money is reallocated in the form of a condo fee to cover the building’s repair and maintenance expenses.

Secret Gains

If you find yourself with some adult children happily overstaying their welcome (the chicks need to leave the nest at some point!), moving to a smaller space is the ideal excuse to force them out of their much-too-cushy situation, and you still get to look like the good guy (all the while enjoying your newly afforded freedom).

Furthermore, by downsizing you have the ability to make more options available to you regarding a changing lifestyle. Maybe you’ve always dreamed of living in the city with its many amenities and activities within walking distance, but didn’t want to uproot the family or raise children in the city. Well, now is your chance. Cities cater to a smaller living space all while offering many conveniences, ideal for supermarkets, shopping, sightseeing, dining out, and transportation.

Essentially, the three big gains of downsizing your home are the time you will save, the money you will save, and a better cash flow. Depending on the type of lifestyle you wish to lead, a smaller home in the city can be a fantastic option, providing many of the necessities within walking blocks from each other. There is no such thing as doing too much research, and always consult with industry professionals you trust for advice. A smaller home is a big change for a better life!