FREE LANDLORD RECORD-KEEPING TOOL
Estimate annual rental cash profit and see how residential mortgage interest may affect taxable property profit for an individual landlord or company.
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Rental property profit calculator
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For example, eligible agent fees, insurance, repairs, service charges, cleaning and direct letting costs. Do not include improvements or mortgage capital repayments.
Enter interest and eligible finance costs only—not the mortgage capital repayment.
How to calculate rental property profit
Start with rent and other property income received during the year. Deduct eligible day-to-day running costs, such as agent fees, insurance, repairs and service charges. Keep mortgage interest and other finance costs separate because individual residential landlords cannot normally deduct them directly from taxable rental income.
The calculator shows cash profit after finance costs. For an individual landlord, it also shows taxable property profit before finance costs and a maximum illustrative 20% finance-cost tax reduction. For a limited company, it shows a simplified property profit after finance costs.
Typical allowable landlord expenses
- Letting agent and management fees
- Accountancy fees relating to the property business
- Buildings and contents insurance
- Repairs and maintenance, but not improvements
- Ground rent and service charges
- Council Tax and utilities paid by the landlord
- Cleaning, gardening and direct advertising costs
- Eligible replacement of domestic items relief
Capital improvements, the purchase price of the property and mortgage capital repayments are not ordinary running expenses. Repairs restore an asset to its previous condition; improvements generally enhance it beyond that condition.
Mortgage interest for individual landlords
Since 2020/21, an individual residential landlord generally calculates taxable property profit without deducting finance costs. HMRC may then allow a basic-rate tax reduction, currently 20%, based on the lowest of eligible finance costs, property-business profits and adjusted total income above the Personal Allowance.
The reduction cannot create a tax refund. If the restriction limits the amount used, unused finance costs may carry forward. Therefore, the calculator’s potential reduction is not a final tax figure.
Rental profit calculation example
An individual landlord receives £15,000 rent, pays £3,500 eligible running expenses and incurs £5,000 mortgage interest. Taxable property profit before finance costs is £11,500, while cash profit after interest is £6,500. The maximum illustrative basic-rate finance-cost reduction is £1,000, although the landlord’s other income and tax position can reduce it.
The £1,000 property allowance
Individuals may have a £1,000 tax-free property allowance. Depending on the circumstances, a landlord may use the allowance instead of deducting actual expenses. It cannot always be combined with other reliefs, and connected-party or Rent a Room situations can change the position. This calculator uses actual expenses and does not apply the property allowance.
Records landlords should keep
- Tenancy agreements and rent schedules
- Bank records showing rent received
- Agent statements and management fees
- Invoices and receipts for repairs
- Mortgage-interest statements
- Insurance, service charge and utility records
- Details distinguishing repairs from improvements
If you own several UK rental properties, HMRC generally combines their income and expenses to work out one property-business result.
How Real Key Accountancy can help
- Organise rental income and expense records
- Reconcile rent with bank and agent statements
- Separate repairs, finance costs and possible capital spending
- Maintain digital bookkeeping for landlords
- Identify when appropriately authorised tax advice is required
Explore our landlord accountancy support in Wolverhampton, check your MTD position with our MTD Start Date Checker, or contact Real Key Accountancy for record-keeping support.
Official landlord guidance
The rules were checked in August 2026 against HMRC guidance on paying tax on rental property and residential landlord finance-cost relief. Always check current guidance before taking action.
Frequently asked questions
Is mortgage interest an expense for an individual landlord?
It affects cash profit, but individual residential landlords generally cannot deduct it directly when calculating taxable property profit. A restricted basic-rate tax reduction may apply instead.
Can a landlord claim mortgage capital repayments?
No. Repaying the borrowed capital is not an allowable rental expense.
Are property improvements allowable expenses?
Not as ordinary running costs. Capital expenditure may receive different treatment, depending on the circumstances.