if you buy a property then let unfurnished and replace the boiler after say 6 months or even a year for a cost of £400 is the whole £400 allowable under the renewals basis on the basis the original cost of this boiler was included in the purchase price of the property?
Or is this considered the "original cost" and so is not allowable until it is next replaced?
PIM3200 regarding renewals refers.
Thanks.
Mister E
Replies (2)
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Necessary repair or voluntary improvement?
If you buy a dilapidated property with a geriatric boiler that you never expected to work and which breaks down as soon as autumn comes, the £400 is part of the capital cost of putting the property into a fit state for habitation, never mind letting, and would not be deductible from income.
If the boiler seemed OK on purchase and then breaks down, after even 1 month of letting, replacing it with a similar boiler is a renewal which is deductible from income. Just as double glazing is accepted as a renewal of an old single glazed window, a condensing boiler would not be considered a capital improvement on an old boiler because the regulations these days require condensing boilers.
However, if the boiler has not broken down and does not need to be repaired/renewed, but you choose to replace it for fuel economy, cosmetic or capacity reasons, the £400 is not deductible from income and would be an improvement to be set against the capital gain in due course.