Expanding a property portfolio can be rewarding, but poor accounting can quickly erode profits and create compliance risks. Here are the five most common mistakes landlords and property investors make when scaling their portfolios:
1. Mixing Personal and Business Finances
Many landlords pay property expenses from personal accounts. This makes it harder to track deductible costs, creates confusion during tax return preparation, and weakens the case for limited company structuring. A separate bank account or company structure provides clarity and strengthens financial control.
2. Poor Record-Keeping of Expenses
Receipts for repairs, maintenance, and professional fees are often misplaced or recorded inaccurately. HMRC requires evidence for allowable expenses, and failure to track these can lead to paying more tax than necessary. Digital bookkeeping tools reduce this risk and prepare investors for Making Tax Digital.
3. Not Using Special Purpose Vehicles (SPVs)
Holding multiple properties personally can result in higher tax bills due to Section 24 mortgage interest restrictions. For many investors, structuring purchases through a limited company or SPV allows mortgage interest relief, controlled profit extraction, and better succession planning.
4. Overlooking VAT Opportunities and Risks
Developments, conversions, and commercial property transactions often have VAT implications. Failing to register, reclaim, or apply VAT correctly can either lead to missed reclaim opportunities or unexpected HMRC assessments. Early VAT planning is critical.
5. Ignoring Long-Term Tax Planning
Investors often focus only on short-term income, neglecting inheritance tax, capital gains tax, and exit strategies. Without forward planning, portfolio growth can trigger unnecessary liabilities when properties are sold, transferred, or passed to the next generation.
Final Word
Property investment is as much about strategic accounting as it is about finding the right property. Avoiding these mistakes ensures compliance, protects profits, and supports sustainable growth.
If you are growing your property portfolio, NiS Accountants can help you put the right structures, systems, and strategies in place from day one.
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