Property Income - Repairs

Property Income - Repairs

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Hi all,

I have a client who has inherited a property and needs to do some repair work. We have ascertained that it is likely to be revenue and not capital in nature (for example a bit of painting etc). Someone mentioned to me that such expenses are not allowable as the porperty has not been let previously. Is that true?

To illustrate:

- I buy a house today and spend £100 painting it magnolia. I start renting it out next month for the first time. Would the painting be allowed as a deduction? Or is it blocked as it is pre lettings cost?

On the assumption that this is in fact true, then I have another slight complication. The client inherited the property with a provision that a relative who lived in the house was allowed to stay there until death. That relative never paid rent to my client but he wasn't able to let it (as the realtive lived there). Now that the relative has died, he wishes to rent it out.

Does the life interest tenant mean that this house was "let" and thus the repair work done post death of relative is in between different lets.

(To clarify, this is NOT a holiday let but a potentially furnished residential let).

Replies (4)

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By User deleted
23rd Aug 2011 16:34

Allowable

It will be treated as incurred on the first day that letting commences. I would ignore the 'slight complication'.

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By TaxationPete
24th Aug 2011 09:10

Pre business costs.

HMRC make it more complicated than that.

hmrc.gov.uk/manuals/bimmanual/BIM46906.htm

Regards Peter

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By cyrynpen
24th Aug 2011 09:27

Thanks for your replies. I've had a read through the HMRC Property Rental toolkit and the BIM you gave.

My view now is that mostly it depends on whether the repairs are routine maintenance or not. Therefore assuming it qualifies as routine maintenance then it should be allowable regardless of whether it was done before the first letting or not.

I have no idea where this idea that it was automatically disallowable if made pre first let.

Any more views would be gratefully received!

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By Ding Dong
24th Aug 2011 14:36

a previous thtread

A previous thtread onthis a yaer or two ago (I cannot find at the moment, will keep looking) talked about when a landlord buys a property with a view to letting it, "does it up" before letting (new doors/bathroom/tiling etc) and the lets it, the thread ultimately stated that the cost was not allowable as a deduction under PIM3200 as it was the cost of an original installation. This does link in the the 10% wera and tear allowance - so not sure if relevant here. I will keep searching for the thread but the manual quotes "

But a taxpayer cannot deduct:

the original cost of installing these fixtures,the extra cost of replacing a fixture with an improved version; for example, where a worn out but basic, cheap bathroom suite is replaced with an expensive, high quality suite; they can only deduct the cost of replacing like with like.

The original cost of installation means either:

the cost of installing the assets for the first time in a new property, orthe cost of replacing worn out assets in an old property that has been bought to let, or which you are converting to let.

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