Accounting for stamp duty land tax

Andorin

Hi,

I own a rental property through a limited company. When the company bought the property it had to pay a substantial amount of Stamp Duty Land Tax (SDLT). This tax is sufficient to cover profit for the next several years (I don't know if it's permissible to count it against profit though when calculating corporation tax?). When doing the accounting for SDLT is it treated just like any other expense, or should I be doing something special with it?

Thanks

Alexia

Hi, @Andorin.

While I'm always happy to help out with management accounting, the second taxes are involved, it's a good idea to speak to an accountant. They'll always know much more than we do on the subject. I can't speak at all on the subject of compliance to your local tax laws.

I can tell you that when it comes to paying non-sales taxes, using a regular expense categorized to an expense account of your creation is usually enough. Again, I do recommend double-checking with an accountant to make sure.

trelimon

I have the same question (although it isn't in a company). While it is fine to record the tax transaction as an expense, how to you link that to the property 'costs' (ie. including the purchase price and capital renovations) so that you can report on the profitability of the property when it comes to sell it in the future?

James_Hudson

Hey @harper, if I understand correctly, you want to make sure that all income and expenses recorded to a specific property are recorded in the same place so that you can see profit for a specific property.

There's no way in Wave to generate a Profit and Loss report for anything under the business level in Wave, so we'll have to get a bit creative here.

I'd recommend doing would be to rename any of the income and expense accounts associated with the property to a property-specific name. Each account should be something like "Rent income - Property A."

Once this is done, you'll be able to generate reports that immediately give you a bit more clarity into which expenses and income have been recorded where. To filter out any irrelevant income and expenses to a property, export your Profit and Loss report to a .csv, open it in Excel or Google sheets, and remove any rows that aren't related to the property.

Hope this helps!

trelimon

Thanks for your advise. I have considered that workaround myself but decided against it. The downside is that at tax time it won't be possible to see all income/expenses across the portfolio in a single report. I would imagine adding a 'department' field or tag is a relatively easy feature to add but so incredibly useful. Can you consider this? I think would be extremely popular for every user.

JordanD

@trelimon Thanks so much for providing us with an ideal way of what you'd expect that this could look like within Wave. Part of the complication here is that the way that the reports pull information currently is based off of the account that is selected, and would likely demand our Development Team to rebuild the current back end process to not only pull accounts but also pull in tags. In saying this, I have escalated your feedback to our Product Team so that they can continue to assess the best way to address this.

trelimon

thanks @JordanFromWave - that's true (although pretty simple) - an alternative hybrid approach could be simply to report on the field 'Dept' without needing to filter on it (this is surely incredibly simple to implement) and then at the very least we could export the CSV to do some management accounts in Excel.