Accounting for Rental Property
If you have rental property, it is highly likely and beneficial to you to prepare a tax return. Not doing so can lead to significant penalties from HM Revenue and Customs.
Accountants can analyse your income and expenditure in a manner that allows you to come to an accurate profit figure and also analyse other reliefs avaialble to you.
Whether you’re an owner of rental properties, or managing the property, the whole financial process behind rental properties can be incredibly difficult.
Menacing away beneath the mandatory profit and loss statements, there are a large number of financial transactions demanding your attention; from the incoming rental payments to the outgoing repairs and maintenance costs, they all need to be monitored. And, if you own multiple properties, it gets even more complicated.
You may be familiar with the terms rental property and property manager, but knowing exactly what they do and how they operate is perhaps unchartered territory.
Rental property is where the owner of a property receives payment from the occupants, known as tenants, in return for using the property. Rental properties can either be residential or commercial, and each have separate guidelines and regulations owners need to comply with.
A property manager is a third party who is hired to handle the daily operations of a real estate investment. They can manage all types of properties, from single family homes to large apartment complexes. Responsibilities differentiate depending on their terms of contract, but most managers are liable for finances; being in charge of collecting, setting and adjusting rent, handling deposits, managing the budget, maintaining records and filing taxes. Along with this, property managers need to oversee tenant welfare, dealing with complaints and also rectifying any maintenance and repair issues.
The rental property field is diverse and detailed, and devising equal time to each area can become very stressful. Dealing with accounts requires highly specialised, expert knowledge, and, tax-related laws and loopholes can provide unwanted complications. Therefore, hiring a qualified accountant to organise and implement an efficient accounting system is a logical step to help combat the complexities.
Firstly, hiring an accountant will give you complete peace of mind. Knowing that you have a qualified and competent individual keeping everything in order; all the tax returns will have been dealt with, the cash flow is in order.
Secondly, and perhaps most advantageous, using an Accountant will save you money. When letting or selling a property, tax payments can be a hurdle that reduces your profit considerably.