Are you renting out your property as a short term vacation rental and wondering what you can claim?
You may have ended up here from our previous blog, all about the Rent-A-Room scheme for short-term, furnished lets within the UK. If not, check it out here – you could be saving £1500 in tax!
None of us are turning our nose up at the proposition of some tax-free, or just some extra income, so what do we need to know about renting properties out on a short-term basis.
(Please note that all of this information, as well as the info in the other article re the Rent-A-Room scheme is involving short-term rental of your own, furnished property. This is not for the rental of additional properties as a landlord to long-term tenants.)
What expenses can I claim?
With a vacation or holiday rental, there is a real overlap between your personal usage and the usage by your guests, as this place is still your home, and you likely spend a good chunk of time there. Therefore, figuring out what expenses are deductible can be a little tricky.
Let’s start with what definitely is:
- The fees associated with any advertising or booking of the property (for example through AirBnB or similar)
- Cleaning costs for before, during and after a guest’s stay
- Items provided specifically for the guests (nothing we love more than turning up at a property to see a nice hamper of local goodies!)
- Bedding, towels or other items specifically for guest use (having strangers in your home is one thing, but having them sleep on your sheets is quite another!)
- Repairs to any damage done exclusively by guests (this is NOT general maintenance or replacement of old appliances etc. This is exclusively for if the guest has caused damage which needs repairing, eg they broke a window or spilled red wine on your carpet)
- Photographers, advertising & marketing
As you can see by reading through the list above, what we’re looking for is a very clear distinction between costs that have ONLY ARISEN due to the fact that you have rented out your property, and the costs that would have been incurred anyway (water, electricity, gas, wifi, insurance etc)
How can I track my utility usage?
In terms of utilities, there are all kinds of smart metres and apps available these days that could help you track exactly what was used during your guests’ stay. This would be preferable, as the costs of such things can fluctuate a lot throughout the year (eg more heating in winter!)
Alternatively, at the end of the year, you could look at your yearly expenditure, and work out how much of that was used by yourself, and how much by guests, by dividing it between the weeks / months that you were in the property (but yeah, option 1 will be easier!).
What about subscription services?
Something else I know we ALL want in our holiday rental is all the subscriptions – Netflix, Amazon Prime, Disney Plus, you name it! If you’re not having a pj movie day on a rainy day during your UK holiday, you’ve not done it right! So as a host, providing these subscriptions is almost a necessity. Again though, there will of course have been an element or personal usage during the time you were living in the property, so, claiming a portion of these subscriptions, by using similar principles as you would with utilities, is a good idea. For example, if you have let out the property for 1 week within the month, you could claim a quarter of the subscriptions costs for that month.
What about maintenance and upkeep?
Then, of course, they greyest of areas, is the upkeep and general maintenance of the property. Given that you are the one living in it, and causing the wear and tear, the majority of the time, you do need to be careful with how much you claim here, and, to be honest, it’s very likely a case by case basis. If you live in your home 50 weeks of the year and get a new bathroom … you’re the one benefitting from that and so this is not a deductible cost. As a rule, we would suggest that any large repairs or maintenance like this would not be incurred due to the rental and therefore not be deductible.
Of course, there are always nuanced and grey areas, but here we think we’ve managed to cover most of the main costs involved! However, this advice is by no means extensive, so we would suggest speaking with an accountant before going down this route.
Overall, if you have a property, and you’re not too fussy about letting strangers into your home, then becoming a short-term rental could be a way to literally get your vacations to pay for themselves!
For more info on this, or other ways to ensure you’re claiming all you can, enquire with us here.
For more tax tips and advice, check out PPF on YouTube!