Most of the direct costs of running a property rental business can be deducted from your rental income when calculating your taxable profit, but the cost of acquiring the property and any other capital improvements are not deducted.
Allowable expenses would include; legal fees for tenancy agreements and debt collection, letting / managing agents fees, accountancy fees, advertising for tenants, motor expenses for travelling to the property, gardening, cleaning and insurance.
The cost of repairs can also be set against rental income but improvements must be added to the cost of the property and will attract tax relief when the property is sold.
It can be difficult to distinguish between repairs and improvements. Broadly, a repair restores what was originally there without adding any new functionality, anything else is capital.
For more information, please contact Lesley Sutton on 01484 550037 or email firstname.lastname@example.org.