Landlord expenses - Capital allowance or revenue allowance....again

Landlord expenses - Capital allowance or...

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  hello all

another landlord expense query, if anyone can help...... residential landlord has been informed by builder that the roof needs replacing as there are so many loose/broken tiles - it is in a very poor condition. He says that it would not be cost effective to just replace damaged tiles & if next winter brings more strong winds & rain then further faults will arise. Can the cost of replacing the roof be claimed as revenue expenditure as the builder thinks it is necessary to replace all the roof to maintain the property condition & not cause further damage eg from leaks, damaged guttering etc.

Any advice welcome

Replies (7)

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Teignmouth
By Paul Scholes
27th Jan 2011 07:24

I'd go for revenue

Hi - I don't think it makes any difference whether its 5 or 500 tiles or 2 or all of the struts that need relacing, if the roof as a whole has got into a state of poor repair then it's replacement should be claimable.

Peter's link gives all the considerations including whether the opportunity is taken to "improve" the property, eg adding some space for a future loft conversion or using materials that are way above "standard".  In such a case, as suggested in the manual, get the builder to split the bill.

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By LisaDeering
27th Jan 2011 09:10

Status at the time?

If the property has just been bought and these are works to get it into a state to enable it to be let it could be capital.

If the property could be let as it is, or it is already let, then it is revenue unless there are any extra space/light created when it would need to be split.

You had a roof and you will still have  a roof. Unless its function is more than it was then there is no capital element in the cost.

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By valentino rossi
27th Jan 2011 10:11

Always Revenue in my book

I think Paul has got the right treatment in that you it is a repair to the whole ie the building whether it is just a few tiles or all of them.

It was my understanding that the Revenue had the same opinion as long as you don't in someway upgrade the standard of the roof. Even then the modern equiviant rules means you can get Revenue treatment(double glazing being the example they give).

If you are concerned tell the client you have made the claim but given the large deduction that will be shown on the Return the Revenue may query and if they do you would be happy to argue the position.

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Euan's picture
By Euan MacLennan
27th Jan 2011 11:13

More than one property

If the landlord has an existing UK property business - which means just one other letting property in the UK - he can claim the cost of replacing the roof as a revenue expense against the overall rental income from his property business, even if this is a case of putting a newly acquired property into a fit state for letting.

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By Cirius di Lemma
27th Jan 2011 13:33

Sorry Euan...

... I don't wholly agree with the point that I think you're making.  Whilst it is true that "ordinary" repairs incurred in respect of a new property would be allowed if a property business already exists, that only applies if those "repairs" are not capital in nature.

If a property is purchased in a state of dilapidation (the OP's circumstances describe a state of dilapidation, but the property in question may not have been bought that way), then one would expect the purchase price to reflect that fact, in which case the subsequent repair would be capital per the decision in Law Shipping (Odeon Cinemas distinguished).  So the point made in that respect, seems to me to be perfectly valid.

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By romi
29th Jan 2011 02:26

thanks for replies & more

The property is the only one owned for rental by client; it was purchased 4 years ago & client was aware that the roof was not in great condition but it was water tight. She had some repair work done before letting the property, which would be added to initial capital expenditure & CGT consideration, if property ever sold. The same tenants have rented the property for last two years & intend to stay longer so the roof work is not an improvement to obtain tenants or add capital value, more of a necessity really. 

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