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Rental Accounting

Should You Track Allowable Expenses For Landlords With A Buy To Let Spreadsheet?

In order to run a profitable rental business, you need to make sure you keep detailed records of all allowable expenses for landlords. This can be done using either purpose-built software like Landlord Studio or by using a landlord spreadsheet like the free downloadable template attached further down in this article.

In this article, we take a look at the pros and cons of using spreadsheets for tracking allowable expenses for landlords and take a look at why now is a good time to be looking at purpose-built software alternatives like Landlord Studio.

New MTD Changes: Spreadsheets vs. Property Management Software

As your portfolio of buy to let properties expands so too does the amount of admin required. You will need a system to keep detailed records of all your income and expenses not only for tax purposes but also to allow you to gain clear oversight of your portfolio.

As your portfolio grows using a spreadsheet quickly becomes unwieldy and allowable expenses can slip through the cracks. At best you’ll spend hours unnecessarily manually checking through bank statements and paper receipts – at worst you’ll miss deductible expenses or declare your income incorrectly and end up overpaying at the end of the year.

Swapping from paper and spreadsheets to a rental property accounting system will save you time. More importantly, though it will help you keep everything organized helping you identify weak points in your business so that you can increase profits.

Spreadsheets are wonderfully adaptable and it is software that most people have access to. The problem is that each property is like a business in itself, and running just a single business on spreadsheets is hard enough. Setting up your spreadsheets in a manner that makes sense with the right formulas, and formatted to make them understandable is a significant challenge. This is why software like Quickbooks and Xero have become so popular in recent years.

On top of this, with the new MTD regulations coming into effect in 2024 landlords need to be keeping digital records just to stay compliant. If you continue to use spreadsheets you will need to use bridging software in order to submit your records to the HMRC. It’s is much easier to simply use purpose-built software that can do it all for you.

Download Our Free MTD Guide here →

One of the key advantages of using software like Landlord Studio is that everything is already organized and set up for you. All you have to do is input your income and expenses.

Additionally, our software allows you to easily digitize receipts and attach them to your expenses, manage tenant communications, run professional reports, and create rent reminder emails so that your tenants never miss a rent payment again.

Finally, cloud-based software allows you to manage your properties anywhere, anytime. Meaning you no longer have to sit down in the home office for hours every month. Instead, open the app and update your income and expenses in real-time.

Allowable Expenses For Landlords That You Must Track

An allowable expense for landlords is anything you have spent wholly and exclusively for the purposes of renting out your property. This broadly means any expenditure in relation to the property’s upkeep.

What expenses are allowable?

Some examples of allowable expenses are:

  • General maintenance and repair costs
  • Water rates, council tax, gas, and electricity bills (if paid by you as the landlord)
  • Insurance (landlords’ policies for buildings, contents, etc)
  • Cost of services, e.g. cleaners, gardeners, ground rent
  • Agency and property management fees

What expenses aren’t allowable?

Not all costs you incur are considered allowable expenses. An important example of this is you can no longer deduct things like your mortgage interest payments. Instead, you must declare the profit, and then you can claim back a portion of the mortgage interest. You can read more about the section 24 tax changes here.

Get your free buy to let spreadsheet template

This buy-to-let spreadsheet is the perfect way for landlords to track allowable expenses to prepare for their tax returns. The rows on the left-hand side of the spreadsheet act as a great guide to allowable expenses.

These allowable expenses can be deducted from your overall tax liability if these items have been used for business purposes.

The sections covered under expenses include finance charges, rents, rates, ground rents, insurances, maintenance, repair costs, fixtures, fittings, furniture costs, wages, service costs, travel costs, and miscellaneous costs.

The buy-to-let spreadsheet template is set up to track your properties on a monthly basis with an overview page.

Download Our Free Buy To Let Spreadsheet Here

Why and how to transition from buy to let spreadsheets to software

If you’re already using spreadsheets or otherwise looking for a better alternative you can try Landlord Studio free for 14 days. We have made the transitions as easy as possible. What you need to do is download the app from the App Store or Google Play Store or start a free trial through our website.

Then add the details of your first property, the current lease details (you can set up automated rent reminder emails at this point as well), and late fees if applicable. The software will automatically bring your income for this lease up to date.

Finally, you will want to add your expenses. We have already set our expense categories to match the HMRC’s. You can log an expense manually, set recurring expenses, link your bank account and reconcile from your transactions, or take a photo of your receipt and it will automatically scan the receipt and log the expense for you.

Getting set up only takes a few minutes and makes tracking your income and expenses incredibly easy.

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