Buy to let allowable expenses

Buy to let allowable expenses

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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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By ayoub.london
05th Aug 2013 22:33

I went through the HMRC website and files but it doesn't seem very detailed. Any hints on the above request would be greately appreciated, many thanks.

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By sash100
05th Aug 2013 23:39

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.

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Euan's picture
By Euan MacLennan
06th Aug 2013 10:23

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.

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Replying to Dib:
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By ayoub.london
08th Aug 2013 19:54

Many thanks Euan. Yes, the expenses will be exclusivily for the letting but I will still be in the flat while doing th fixing; overall I am wondering whether the following can be allowable expenses - would be great to have you thoughs:

1- Expenses to prepare the flat before renting it: cleaning expenses, repairing doors,  painting, fixing electrics, fixing toilets; I would do this few weeks before renting the property

2- Broker fee – this is the fee to help arranging a buy to let mortgage
3- Arrangement fee for the mortgage provider
 

Many thanks,

 

Alex

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By King_Maker
09th Aug 2013 09:26

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.

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