Dear colleagues,
I am looking to rent my property in c. 6 month time and I want to have some advice on what I could claim to reduce my tax.
It will be a residential letting, 1 bedroom flat, in London and I need to do some refurbishment before putting the property on the market; I for example need to fix the front door, paint the inside, buy a new washing machine, buy a new lock.
I wonder which of these costs are eligible for ‘allowable expenses’
I had also changed the boiler and re-did the kitchen; I wonder if I can treat them as ‘allowable expenses’.
Looking forward to hearing from you soon,
Thanks & best regards,
Replies (5)
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employ an accountant
While you may not require an accountant
I think initially it is always better to employ an accountant to make sure you do not miss anything costs or claim for costs that are disallowable. After gaining knowledge then you can dispense with their services. They would also be knowledgeable about ltax aw changes like the renewal basis
Certainly, if you intend to selling the property capital gains would apply (if its your second home)and there would be an higher need to employ an accountant anyway. Some of the costs you mentioned could be adjusted against your capital tax liability as oppose to income tax.
Allowable expenses
... are those expenses wholly and exclusively incurred for the purpose of your property letting business, which are not capital expenditure and which can therefore be deducted from the rental income.
"I need to do some refurbishment before putting the property on the market" means that the proposed expenditure is being incurred to put the property into a fit state for letting, which indicates that it is capital expenditure and therefore not deductible from the rental income.
"I had also changed the boiler and re-did the kitchen" suggests earlier expenditure when you were living in the property. If so, it is not deductible from the rental income.
"I am looking to rent my property in c. 6 month time" indicates that you have not yet started your property letting business, unless you already have another letting property.
1. If you are living in the flat while doing these repairs etc, you may find it difficult to pass the "wholly & exclusively" test.
2. Yes - amortised over the term of the loan.
3. As 2. above.