If you own a rental property then you will have to include information from your letting accounts on your personal tax return. Letting accounts are usually prepared for a number of properties so that the results from pooled assets are shown in one set of letting accounts. These letting accounts are very useful if you require additional finance to purchase other rental properties. As these rental accounts can be used as a basis to show that the income generated by the pool of properties will provide enough cash flow to service the debt repayments due from the increased borrowing being applied for.
Rental accounts show the income generated by the pooled assets and the original cost of the properties when they where first used as rental properties but does not show the capital growth. Investors historically have been looking for capital growth rather than showing a profit in their rental accounts as traditionally the rental income from tenants has only just covered the mortgage costs and any outgoings. However, the capital growth over recent years has slowed and Investors need to take a view on the likelihood of capital appreciation exceeding inflation and what the interest rates are likely to be over the next 10 years.
How we can help
If you would like to discuss any of the above please contact KR Accountants so we can arrange a No obligation FREE initial meeting to carry out a business review were we will offer you a FIXED FEE accountancy service with no hourly charges or hidden costs.