Tax Alert! No need to panic
For anybody with residential investment property it’s rapidly approaching that time of year – it’s time to do your tax return. How I envy those people on PAYE, all they have to do is pick up their little slip at the end of the month and Payroll has done all the tax calculations for them.
Life is not quite so simple for those of us with rented property. There is the small matter of the weighty tomb known as the Tax Return. As those who have this annual chore will know the first deadline of September 30th is rapidly approaching for those people who wish the Revenue to calculate their liabilities for them.
The relevant section for most buy-to-let landlords is Land & Property, which relates to property income. It is here in the numbered boxes between 5.19 – 5.31 that we have to enter the key figures relating to our burgeoning property empires. Having to do the individual calculations on the rent received, interest paid, expenses can be a real pain.
This is exactly why here a Property Hawk we have designed the Property Manager to do all this for you. I deliberately avoid ‘techie’ words like integrated and multifunctional to describe how the system works; but by adding information like your tenancies and expenses you can then go straight to the section on Income Tax and literally read across the figures inserting them directly into your return. It’s as simple as that. You can even put in and end tenancies retrospectively so that the fact Property Hawk has not been around since the start of the last tax year 6 April 05 doesn’t matter.
All you need to do to get your final accounts is:
- Create tenancies in the tenancy section and end them if they have finished during the 05/06 tax year – this will enable you to add in the rents received giving you a record of your income for the year.
- Add in the mortgage Interest payments you have made during the Tax year under Mortgage Interest (you can use the mortgage calculator on the homepage to help you with this).
- Under expenses, enter any allowable costs that you have incurred in your business. Some like phone bills, travel are general ones but you can still just select a property and attribute them to one of these. This will not matter as the Revenue is only interested in the total figures relating to your letting business not on figure for each property.
Once you have done this, it’s done and you will have a set of figures under Income Tax, which can be printed off or, entered straight into your tax return. It’s that simple. Unfortunately, whilst here at Property Hawk we aim to make the process of compiling your tax return simple, we wont be able to do anything about making your tax demand smaller!