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Rental property

 I have a client who rents property. At the end of August 2010 his tenant moved out, so following this my client completely modernised the Bathroom and Kitchen. He then moved into the rental property in September and let his previous home.

He advises that the work he had done on the property occured whilst he was still looking to rent it (his previous residence wasn't rented until the end of September).

Therefore can he claim for these improvements as legitimate business expenses? If he moved in after the work was completed would this make a difference?

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By Zach
25th Aug 2011 11:26

Does anyone have an idea on this one please? 

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25th Aug 2011 12:44

Terminology

If these are "improvements", then the likelihood is that they are capital, and thus not deductible from income anyway, regardless of when the expenditure was incurred.

However, if they are genuine "repairs", then I would say they could be deductible, providing that the client could demonstrate that the property was available for letting - this is the tricky part.  If he has copies of adverts placed seeking a tenant, or instructions to a letting agent accordingly, then he might be OK.  The rental business does not end until the property is no longer "exploited" for income.  If he can show that the decision to move in was not taken until he gave up on finding a tenant, this may go in his favour.  Otherwise, HMRC are likely to say that it was done for his own benefit (with a view to his moving in) and thus not deductible.

 

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