A Guide to Landlord Accounting


When letting a property, there are many rules and regulations you have to stick to.

While the process of ensuring the home is safe for occupying, and that your tenants are looking after it okay can be time-consuming, there is also another aspect that is vitally important to consider.

Your finances.

Letting out houses is a business, and therefore tax must be paid.

If you’re a landlord, and you’re needing some help ensuring you’re paying the right tax and that your books are all in order, then you may require a landlord accountant.

But what does an accountant for landlords do? And how can you choose the right one for your letting business?

Let’s take a look.

Do Landlords Need Accountants?

In short, yes!

As mentioned above, there is a lot to consider when letting out properties, but there aren’t many things more important than getting your finances in order.

An accountant isn’t just about making sure you tick all the right boxes though, they can help you find the most tax-efficient ways to run your business and your finances.

Tax works on the financial year (the beginning of April onwards) and how much tax you pay is calculated on your profits throughout this time.

But it isn’t as simple as counting how much money came into the company, as there are many expenses that shouldn’t be included as they are costs involved in the running of the letting business.

As a landlord, keeping track of expenses and income can be hard, especially when you work with more than one property.

This is why an accountant for landlords is essential. This is someone who can work with you, making sure all figures are correct and assessing and calculating your tax returns at the end of the financial year to ensure you are paying the right amount.

What Are Some Allowable Expenses for Landlords

Any landlord will know that operating a rental business involves extra costs.

As these are being spent on the business, many of these can be claimed as expenses, and therefore can be deducted from your rental profits.

Some things you can count as expenses are:

·      Bills and Taxes – There are many expenses that come with owning a property. A landlord can choose whether to pay the bills, or whether to get the tenant to pay it. If the landlord is paying for things like council tax, water, electricity, and gas, then these can be deducted from the profits.

·      Ground Rent – If you own a property that is on someone else’s land (such as an apartment), then you will have to pay ground rent to the freeholder. This can be removed from your profits as it must be paid to operate your business.

·      Maintenance and Repairs – As a landlord, you must make sure the place you are renting out is habitable. This means that any maintenance, repairs, and even redecorating (in some instances),is covered as expenses and shouldn’t be included in your rental profit.

·      Insurance – Every property should be insured, and if you are paying, whether monthly or annually, to keep your property protected, this should be counted as an expense.

·      Accountancy Costs – Even the money that you pay an accountant can be removed from your profits, making choosing to work with us a real win-win.

There are many other expenditures that can be classed as expenses and having an accountant on your side who can sift through your finances and pick out what you can claim can be a big help in calculating exactly what you should be paying.

Is a Business Account for Landlords Needed?

Having a business account comes with some benefits.

Firstly, it allows you to keep your business money and your personal money separate. It also makes it much simpler to assess the funds that have gone into and come out of your business, both for you and your accountant.

Record keeping is important in accounting, when funds may need to be checked as far back as six years ago.

Having a separate bank account makes keeping record of these transactions and figures much easier, meaning if there are any issues you can quickly pull up the correct data needed.

Beginning in 2024, the governments MTD(Making Tax Digital) scheme will require accounting software to provide your figures to HMRC every three months. For a landlord who isn’t too tech-savvy,this is when having an accountant who can ensure you keep up to date and have the required tools to send your data across is vital.

What Does a Landlord Accountant Do?

There are many things an accountant for landlords does.

Prepare Statements

Every financial year, and every three months come 2024, a statement of earnings and expenses needs to be handed over to HMRC.

A landlord accountant can take care of this, as long as they are provided with your finances and transactions throughout the year, they will ensure the right information is handed over in the right form and on time.

Assess Your Transactions

Without an accountant, you may be paying for some things that you should be claiming as expenses. This means that when the time comes, you may be paying too much tax.

As mentioned above, there are many things a landlord can class as business costs, and that shouldn’t be counted in a final income figure, and a landlord will be able to pick these out and ensure every transaction falls into the right category.

Keep You Up to Date

Be honest, how many of you knew about the 2024 MTD changes?

One person who certainly did was a landlord accountant.

Part of the life of an accountant is making sure they keep up to date with the latest changes in legislation and rules.

They can then keep you, their client, informed of any new actions that need to be taken and ensure that all rules are always being stuck to, no matter how often they change.

Use the Latest Software

In modern times, having access to accounting software is vital, and its importance will only rise in 2024.

Due to this, having an accountant who can deal with the technical aspect of things, and leave you to deal with nothing but your business, can be a major boost.

Not all accounting software is easy to use, but an accountant should have an in-depth knowledge of the software they use, meaning you don’t have to.

Help You Budget

Being on top of your finances can be tricky.

When you’re juggling multiple properties, many clients, and a bank balance with constant transactions taking money in and out, it can be confusing to work out how much money you actually have.

An accountant makes it easy by calculating all of your costs, income, and much more, and judging easily whether you are operating at a profit or a loss.

They also provide insight into how things are looking in terms of the future and can help you plan ahead with a good estimate of the funds you will have available.

How to Choose the Right Landlord Accountant

You work closely with your accountant, so you must look for someone who is approachable and friendly.

Not only that, but you also need an accountant who is experienced in your industry. If you can find an accountant who has worked with landlords before, for example, then they should already be well versed in the ins and outs of landlord bookkeeping and accounting.

There are many regulations and rules to adhere to in property tax, so an accountant is key, so look out for a team who you know you can trust and are happy to work with.

A team like Blue Rocket Accounting for example.

Our accountants are packed with years of experience and have knowledge of the property industry, meaning they are the perfect match for your letting business.

Blue Rocket Accounting

We know that keeping track of your finances isn’t easy, and that’s why we want to work with you to make sure everything is up to date and you’re paying the right amount of tax.

Take the weight of taxes off your mind and know you’re always financially stable with Blue Rocket Accounting.

If you want to know more, then get in touch today.

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