Buy to let investors purchase a property to let it to a third party in order to receive an income stream and also with the expectation of making a capital gain on the eventual sale of the property.

Many Buy to Let investors start out as accidental landlords when they are left a property by a relative.

Buy to let investors charge tenants rent to stay in the property and the rents are set so that her is a surplus or profit at the end of the year after deducting expenses for than the costs of maintaining the property, letting agents fees and the mortgage interest on the property.

For tax purposes the profit is subject to tax at the individual’s marginal rate of tax but in recent years the amount of mortgage interest that is allowable for tax purposes has been limited for individuals meaning that tax is potentially payable at higher amounts than the net profit.

Traditionally buy to let properties were owned either by an individual or by spouses but there are many cases where there are more than 2 people involved.

Where there are more than just husband and wife then a property partnership is in effect, even if there is no formal partnership agreement. Partnerships are sometimes formalised, mostly into Limited Liability Partnerships (LLP) in order that the properties owned can be transferred into a limited company with beneficial tax implications on the transfer.

We have many clients who have properties in their own names and who we assist in preparing annual property accounts for inclusion in the individual’s tax return.

We strongly recommend that all property owners use software to manage their properties, even if it is just one property that they own. This makes record keeping much simpler and also ensures that the owner receives reminders of important dates.

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