One potentially lucrative landlord money saving tip is how to turn rental losses into cash in your pocket.

Tax rules demand that landlords report rental profits to HM Revenue and Customs under two circumstances.

The first is if your rental profits are not covered or come to more than your personal annual income tax allowance – which is £8,105 for the 2013-14 tax year.

The other is if rental income is more than £10,000 or net rental income (after deducting expenses) is more than £2,500.

That’s fine if you make a profit, but the likelihood is most landlords make a rental loss in the early years of owning a property, especially if the property needed an expensive refurbishment to bring it up to rental standards.

But most landlords just do not bother if they make a rental loss even though the full amount is deductible against future rental profits.

The landlord money saving tip is to make sure a proeprty owner is not out of pocket for spending money on repairing and decorating a letting property.

The best way to record these losses is to complete the property pages on a self-assessment tax return. Overseas letting properties are included on the foreign pages.

Filing the return registers these losses with HMRC and makes life easier when setting them off against future profits.

For instance take a landlord making a £5,000 loss in the first year of letting and £2,500 in the second year before making a profit of £1,250 in the third year.

The landlord has racked up £7,500 in losses against just £1,250 of profits.

Instead of bearing the loss, the landlord can deduct the £1,250 from £7,500 and pay no income tax on the rental profits. The remaining £6,250 is carried forward against the next profit. If another loss is made, simply add it to the carried forward loss.

This landlord money saving tip saves £400 per £1,000 of losses for a 40% higher rate taxpayer.