Help with tax

[Erin8755]

Hi I am looking for a little help, I will seek an accountant but wanted to check in here first. 
I am managing a property for a family member who lives out of the country for parts of the year. I am dealing with all the income as well as everything else and taking an income from this the income all comes into my account. Are there things that are tax deductible each month before I set aside an amount for taxes each month? I have taken off cleaning fees, would my income come off before the tax is deducted as I am managing it or after. 

[Shelley159]

Hi @Erin8755 

For income tax, the basic position is that everything has to be taxed in someone's hands. The family member can deduct management fees paid to you - those management fees are then added to your income and taxed in your hands (assuming you're in a taxable position). The cleaning fees are deducted and taxed in the hands of the cleaning company, the amenities purchased are deducted and taxed in the hands of the retailer, etc. You'll need appropriate invoices for all.

[Erin8755]

Thank you, I had read somewhere that rent can be deducted as well as electricity etc is this correct? 

[Shelley159]

Yes any operating expenses including rent and electricity @Erin8755, to the extent that they relate to the business (in other words, if the whole home is not rented, only the applicable portion).

In the case of loan repayments, only the interest is a considered an expense and not the capital component of the repayment.

It may be hard to get into the habit of keeping tax invoices for all of the expenses, as you will need them when audited!

[Helen3]

Not in the UK STR income is not counted as rental income  @Shelley159 

[John5097]

@Erin8755 

"I am dealing with all the income as well as everything else and taking an income from this the income all comes into my account."

Good to ask.

I'm in the US but I'm guessing its very similar,  and sounds like you need to talk to your accountant. 

The first few years I didn't realize I could be deducting expenses. I had even asked about this and think there was some kind of misunderstanding.

But yes it was very straight forward to make deductions. 

I don't make a lot of them, just the essentials. My goal is to never owe any back taxes as they add lots of penalties and interest, so have receipts to back up everything.   

This is the form I fill out every year. It may give some insights.



It does take some time to keep track and add up all the expenses, but it pays for all of my accounting expense.

So it's a good balance for me. 

Your accountant can best advise you on how to approach this. I would think If the payouts are all going into your account you would be the one responsible for taxes or any mistakes, back taxes and penalties. 

 

[Helen3]

hi @Erin8755 

the income should be going to the owner who will be taxed on the income .

you are then set up as a cohost on the listing and whatever percentage you agreed with your relative set up so you are paid this and taxed on this income.!

for more detail speak to an accountant.

airbnb income is not rental income for tax purposes . 

a list of allowable expenses is on the HMRC website .

[Elisa]

Hi @Erin8755 😊, 

Thank you for asking this question here!

I'm happy to see so many hosts are helping you. Have you been able to find an answer?

What are your thoughts? Do you need more help?

Don’t hesitate to let me know!

Warm regards 🌻,