So - you’re in the property market.
Maybe you’ve just got a toe in the water, and you’re not sure if you’re ready to take the plunge.
Perhaps you’re already in-deep but you’re struggling to stay afloat.
‘How did you know?’
I’ve worked with many-a-client.
I know when someone needs the support only a professional can provide.
You’re in luck.
I'm going to turn your cloudy skies to California sunshine.
And how am I going to do that?
By making sure you know whether you need a landlord accountant.
That’s because there’s two things in life that are constant:
Change, and change.
The property market is one mere example of this.
It’s always changing - it's a rollercoaster showing no signs of stopping!
One day it’s hot, the next day it’s cold.
(British weather, anyone?)
Did you know about the changes in mortgage interest relief?
What about the switches up on stamp duty?
Didn’t think so.
But there’s someone that does. And that’s a landlord accountant.
Sure, they don’t own the Batmobile, and no, they don’t wear a cape…
But their knowledge and skill is on par with superpowers.
And they’re going to take your property game to the next level ...it’s going to be so high you’ll be looking across the plains like Peter Pan in Neverland.
Take one of my clients from 5 months back:
They were hesitant about hiring a landlord accountant…
(Who can blame him - he’s been in the business for 5 years.)
But it turns out that his tax return was actually 3% higher than he thought it would be!
And did you know he was advised to invest in 5 brand new properties and saved £7000 worth of unnecessary expenditure?
He fainted when he saw the results, literally.
(I swear on stamp duty...)
Fancy protecting your business from incorrect tax returns?
Want to save some serious dosh, too?
Then you better act now. Not tomorrow when you’re halfway through your mid-morning coffee.
And not next week when “you get a chance.”
‘Cause you won’t.
You’re likely to save tons of money , be tax efficient, and be sure that your business is doing brilliant?
Great, I've got you covered.
I'll tell you everything I know about landlord accountants and just why you need to hire one.
You’re on the edge of your seat biting your nails.
I’ve just delivered an amazing intro regarding landlord accountants...
And now you’re wondering, well what is a landlord accountant?
Landlord accountants have a wealth of knowledge of the property sector.
They provide tax-based and financial solutions to both individual landlords and property portfolio companies.
And guess what?
Some even specialise in the tighter niches of this field.
But before we get onto that, here’s what you need to know about Landlord accountants:
Landlord accountants have a great understanding of the sector and all the obstacles and hurdles a landlord such as yourself will have to overcome.
They’re also experts in property tax and tax advising.
A tax advisor is someone trained with advanced knowledge of tax law.
(And for your information the size of a tax law book is as thick as an oak tree.)
The aim is to reduce your taxation whilst remaining on the good side of the law - the bad side, on the other hand, can have you swimming with deadly sharks.
Property tax is added onto a property by a governing authority, and it can be pretty costly.
A landlord accountant will help you minimise your property tax by assessing your property tax card and see if your property is being fairly valued.
They’re like the sidekick in a superhero movie!
And that’s what you need, right?
Someone who can stick by you in this complex forever changing sector.
You guessed it.
There aren’t any cartoon characters around here. There’s not a speck of CGI in sight!
They understand not only property tax and planning issues but other business issues like:
Orchestrating different property strategies
Respecting landlord legal obligations
They see things from your view.
And they understand property language!
So we know what they are…
But what can they do for your business?
Full compliance with regard to your tax return
Tax claims planning for your property income
Optimisation of your tax liability per year
Expert advice on options and opportunities specifically in conjunction with your individual business interests
Your own personal specialist landlord accountant who will provide you with the highest quality advice at your command
Landlord accountants also have specific responsibilities which include:
Preparing budgets and statements
Preparing self-assessed tax returns and reports
Up to date with the law and legal changes
Maintaining rental accounts
Setting up escrow accounts
I know what you’re probably thinking.
‘Where has my landlord accountant been all my life?’
It happens to the best of us.
We’re too busy trying to figure out everything ourselves.
Why not make things that much easier for yourself and hire a landlord accountant?
Let’s be honest: you’re going to need all the help you can get.
(If you want to be a success of course.)
One client of ours has an amazing property portfolio, his business has now expanded abroad.
An International landlord!
You can be one too.
You’ve just stepped into your newly purchased property.
The fresh aroma of success captulates your mind.
It’s sensitive to the nose and dazzerling to the eyes, like it’s owned by an A-lister, but it’s not it’s yours.
Everything looks fine.
This is how you imagined it to be this is what you’ve worked for.
You’re already thinking about purchasing your next property.
You never knew being a landlord could be so fun.
Your tax report comes and it’s worse than you imagined.
Your heart sinks like the Titanic and you puke in a basin.
You know your property is not being fairly valued.
(Or maybe you got your calculation wrong.)
You have to pay a whopping £37,000 in stamp duty tax which is higher than your initial estimation.
And no, you didn’t apply for any tax relief.
Now it’s going to hinder you from buying your next property.
"Maybe being a landlord isn’t what it’s cracked out to be?"
*Enter your landlord accountant*
In little to no time, they calculate the accurate value of your property, which reduces your stamp duty tax by £11,000 and they successfully help you claim tax relief.
If only you had hired one from the get-go!
Question is, what else can they do for you?
Tax relief has become more difficult to acquire.
Did you know the government had plans to get rid of the mortgage interest relief in 2017 for landlords?
And that it has now been extended to 2020?
Didn’t think so.
Now it becomes difficult to assess what to expect when you file your tax returns.
Your landlord accountant can not only help you file your taxes, but give you an insight on what tax reliefs you’re eligible for.
For instance, you have to pay capital gain tax if you sell, give away or dispose of an asset and make a profit from it.
(It’s the profit that’s taxed!)
You’re able to reduce the amount of capital gain tax if you’re eligible for tax relief.
Let’s say you let out a property that was once your main residence...
You’re eligible for a Private Residence Relief and Lettings Relief on the sale of the property.
If you’re a first time buyer you’re eligible for mortgage interest relief for the first seven years.
There are other tax reliefs such as the Business Asset Rollover Relief and the Discorporation relief.
You can learn more about them here.
Tax reliefs can have a big impact on your tax liability.
Your accountant will help you get the most out of your investment and give you an understanding on how these reliefs can impact you.
Landlord accountants advice should be taken with high regard (after all they’re experts.)
Your accountant will be able to advise you on property assets and structuring property investments (which is a must if you want to climb the property ladder.)
They’ll also advise you on how to finance one of your projects and which methods are tax efficient.
(You’re trying to make money and save money too.)
It doesn’t matter if you’re a small investor, buy-to-let investor or you’re in the private rented sector.
Your accountant will tailor their advice to match your position.
If you’re a small investor. They may advise you on whether it’s more tax-efficient to set up as a limited company to hold your property investments.
Due to the mortgage interest relief changes the new rule implies that you can no longer deduct mortgage interest costs from your taxable profits.
So everyone will have to claim a basic rate allowance, whereas if you operate as a limited company you can bypass this and function under the old rules.
They also offer advice on other things like tax mitigation and funding.
So if you want to sell, let or invest in a property they’ll advise you on the tax implications of this choice and what planning measures you should put in place.
And if you need funding they’ll advise you on the pros and cons of many funding options available and keep you up to date in any changes in this area.
Read More: Accountant
Landlord accountants use specialised accounting software like Xero and Sage, to give you an accurate picture of your financial situation at all times.
This is crucial information to have.
So you know what changes you need to make if you’re making a loss, charging too much rent or overspending on renovations.
Your accountant will also help you learn more about your financial proceedings and what needs to be adjusted and optimised to be effective.
As a property owner you need your rental accounts together not only to keep check on the ins and outs of your properties, but to keep in line with the law.
You never know when a rental payment might slip through the net or if you lose track on inventory charges, receipts or bills!
Your landlord accountant can help you sort this information with accounting sheets, graphs and reports, keeping your rental accountants in-line and up-to-date.
It’s important that your rental account is accurate.
Because you may be visited by the HMRC for a tax investigation.
If they find out your account listing to be inaccurate you may face a penalty or fine.
But you’ll be fine with an accountant by your side!
Landlord accountants are a bit like chameleons.
No, they don’t have scales, nor are they cold-blooded.
They adapt to sudden changes!
Sure, a big change in tax will be easy for you to follow and handle by yourself.
It’s the teeny-tiny changes that have caught most landlords off guard and even haunt some of them till this day.
Your landlord accountant will make sure no sneaky tax changes affect your investments without you knowing.
So sit back.
And let them take the wheel.
Every year you must submit a self assessed tax return to the HMRC.
You need to declare all your taxable income such as:
Other taxable income
Your tax liability is calculated based on your income and paid to the HMRC.
Your landlord accountant will help you submit your self-assessment tax return.
They’ll reduce your tax bill as low as possible within the current tax laws and HMRC guidance.
(Yep, you won’t know what to do with all that saved cash!)
Some landlords pay extra tax than they’re legally required to pay and that’s because they didn’t get expert advice...
Don’t be that landlord!
Take a recent client of ours for example.
They were new to the property market and they thought it was going to be easy.
In fact in their first year they were on a roll.
They had already purchased two properties and didn’t bother hiring a landlord accountant.
They thought they knew everything.
They had a reality check.
After they purchased their third property, they had a construction worker submit their self-assessment tax return.
Yes, I'm not kidding.
They actually believed the construction worker had more insight just because he refurbished houses.
They didn’t bother to look up what a self-assessment tax return was.
And it was submitted 3 months late!
They were fined £100, but it didn’t end there.
The self-assessment was all wrong and the HMRC launched an investigation.
And they were fined again for improper information.
Sensing another fine they decided to hire a landlord accountant.
Who explained to them how it works and helped them file their tax return.
If only they weren't so overconfident they could have avoided this.
Anybody can call themselves an accountant, but not everybody can call themselves a landlord accountant.
You’re probably thinking.
‘Well...what is the difference?’
At first glance one would think they do the same thing, right?
The thing is, their skills differ greatly.
Landlord accountants are specialist accountants, and they’re only for property investors.
They have a great set of skills and knowledge in the property field compared to an ordinary accountant who won’t be as knowledgeable.
They’re chartered accountants!
Doesn’t sound like a big deal, does it?
It is, trust me.
A person qualified as a chartered accountant means they’ve taken at least 3 years of in depth training and passed rigorous examinations like:
They have the desire to constantly hone their skills and widen their knowledge in the professional field.
(If that hasn’t hooked you over I don’t know what will.)
It’s also compulsory for them to hold a practising certificate and provide indemnity insurance if they offer you their services.
This is an insurance policy that can cover for mistakes such as:
Unintentional breaches of copyright or confidentiality
Loss of documents or data
Defamation or libel
Worried about mistakes? You’ll be sure to receive compensation.
Plus, as they’re specialists they’re less likely to make one.
They have gone through all that rigorous training after all…
If you still don’t think it’s important to hire a specialist landlord accountant, think of it like this:
An ordinary accountant deals mostly with business accounts and may have dabbled in property here and there.
The thing is, tax on property is very complex nowadays. And guess what? It’s about to get even more complex.
It makes more sense to work with a specialist who’s on top of everything property related!
About 7 months ago a client of ours told us he’s been having issues with sorting out his rental accounts.
He complained about missed rent payments and other expenses slipping through, but he didn’t want to make a fuss because he was unsure.
Turns out he’s been doing it himself. Through an online self taught programme.
We told him he needed a landlord accountant, but he was adamant he could improve his accounting skills and do it himself.
Until he came back to us a month later.
It was a good thing he did, as he had now lost £3150 in expenses.
His newly appointed landlord accountant sorted out his rental accounts and he hasn’t missed a single rent payment.
And no unexpected expenses have slipped through.
That’s the power of a specialist.
By now you’re probably excited to hire a landlord accountant.
Am I right?
Bet I am.
Who wouldn’t be!
You’re about to smash your goals with a sledge hammer!
Figuratively speaking (of course.)
Managing a landlord accountant may sound easy, but it’s actually not.
I've seen many landlords who struggled with basic things like communication, and this went on to mess up their business deals!
But I trust you.
I know you’re better than that - I have nothing to worry about!
(But just in case...)
Here are the three things I found help accountants the most.
Communication is very important, especially in business dealings. Yet a lot of people fail to communicate for some odd reason.
And it’s not hard at all!
It’s the bread and butter to enforce a good relationship with your accountant.
Imagine you had a meeting with a plumber and they show up an hour late without telling you.
I'm sure you’ll be mad!
You have other business ventures to attend.
And time is a precious commodity.
Also, you wouldn’t want your plumber to neglect telling you there’s a leak in the bathroom.
Now imagine if the roles were reversed and we substitute the plumber with your landlord accountant.
You can see how that’ll cause a dent in your relationship, right?
With a little bit of communication you can avoid this and you’ll seem more trustworthy and respectable.
A team that communicates well is an unstoppable force!
An old client of ours. Communicates with their landlord accountant so well. They’ve never missed the tax return deadline.
You’re going to be a success.
(I can already tell.)
But that doesn’t mean you can’t be sidetracked.
As a landlord you’re going to be very busy.
So, if your landlord accountant asks you to bring your property details to a meeting.
It's best you prepare.
Imagine a letting agency wants to begin advertising your property and your accountant wanted to finalise your property details...
And you show up empty handed.
They won’t take you seriously, will they?
Well, now you’ve set yourself back and that bad preparation has become a bad habit.
Plus, if you prepare beforehand, you give your accountant time to fix the issue.
Deadlines can be such a drag - we’ve all been behind our laptops with baggy eyes at 5 AM.
And if you leave it too late, those deadlines just stack up until you're basically playing Jenga.
It has to be done. There’s no other way around it.
You need to provide your accountant with all the information they require - and do it on time.
Especially if they need to file your tax report.
You need to avoid fines.
You’re in the business to make money.
Not lose it!
It's easy get an accountant.
But how do you find the right one?
We’ve put together questions we get asked daily.
Are They Expensive?
The pricing depends on the landlord accountant and what they’re offering.
They’ll justify their fees with the services and advice they can offer you.
But the thing is, you should be looking for the best value - not necessarily the lowest price.
Can They Provide Tools, Templates And Guidance To Help With Recordkeeping?
Tools are essential when it comes to managing your property business.
A landlord accountant will be able to provide you with formatted professional standard models and templates so you can understand how your business is performing.
They’ll also help you get to grip with the tools so you can make the most out of them.
How Can I Find A Reliable Accountant?
An accountant who’s overloaded with clients is not a good match for your business.
You’re going to want an accountant who’s available to meet your needs, whenever, wherever.
Ask about their availability, and check their reviews to see what other clients think of them.
How Can I Find An Experienced Accountant?
Experienced landlord accountants have a wealth of knowledge not to say new landlord accountants don’t.
You need to find out their experience level to see if they’ve worked with landlords in a similar position to you.
Afterall, a landlord accountant who’s worked with a landlord at a similar level to you will be a perfect match!
What Qualifications Should I Be Looking For?
Ask if they’re a qualified chartered accountant.
Landlord accountants will have an ACA, ACCA or CIMA qualification, which are accounting models they take to earn their credentials.
They also have to keep up to date with rules and regulations if they want to keep their credentials.
Read More: Basics Of Accounting
By now, you should understand how a landlord accountant can not only save you tons of money...
But also help you achieve financial success!
I know you’re itching to hire one now - ( who can blame you after reading all my fabulous advice. )
You can finally take the property market by storm.
So, let us help you.
Get up to four quotes from our suppliers now!