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Allowable expenses on rental property

Complete refurbishment of property - is it allowable

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Hi, I completely refurbished a flat about 6 months ago (basivcally replaced bathroom, kitchen and all white goods). Basically there are no real improvements - old tiles, kitchen , fridges, etc. were replaced. But also the old items were not derelict and coultd still be used...although I threw awa some and sold others.

Can I subtract all these expenses on the tax return?

I just wanted the tenants to have better quality. 

Thank you!

Replies (16)

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Portia profile image
By Portia Nina Levin
02nd Aug 2018 13:39

How's Eartha?

EDIT: Oops! Just Googled. She's been dead 10 years. Sorry for your losss. Belated.

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Chris Caspell CTA TEP
By ccaspell
02nd Aug 2018 15:12

Given the information that you have provided, the short answer is yes.

From April 2016 the 10% wear and tear allowance was abolished and replaced by Replacement of Domestic Items relief.

Basically, on an item by item basis, you take the cost of the replacement less the cost of any element of improvement (you say there is no improvement) less any proceeds of sale (if any) plus the cost of disposing the old things that have been replaced.

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Replying to ccaspell:
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By petia_kit
02nd Aug 2018 15:25

Brilliant, thank you

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Replying to ccaspell:
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By Accountant A
02nd Aug 2018 16:07

ccaspell wrote:

you say there is no improvement

No, the OP says "But also the old items were not derelict and coultd still be used" and "I just wanted the tenants to have better quality". In other words, improvement.

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Replying to Accountant A:
Chris Caspell CTA TEP
By ccaspell
02nd Aug 2018 16:31

I was reading what the OP said: "Basically there are no real improvements".

I don't agree with your assumption that better quality means improvement. In this hot weather I have an old fan noisily spinning in the corner; I go out and buy a new one - the quality is better (because it's not noisy) but it isn't an improvement.

It seems pretty obvious to me that the OP aspires to being a good landlord by providing new furnishings and white goods for his tenants that make the quality of their stay in the property better.

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Replying to ccaspell:
By Duggimon
02nd Aug 2018 16:39

I don't agree with your disagreement. In your analogy the new fan is an improvement. It either moves more air or uses less energy because if it is not making a noise it is operating more efficiently.

In a more general sense, in what way is better quality NOT an improvement? That surely is one of the definitions of improvement.

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Replying to Duggimon:
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By Wanderer
02nd Aug 2018 16:43

Isn't this a bit of a silly argument?

Whenever you repair something or replace new for old there is an 'improvement'.

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Replying to Duggimon:
Portia profile image
By Portia Nina Levin
02nd Aug 2018 16:45

It's not an improvement in the sense that it does no more than the old fan did before it started making the noise. You buy something it works well for a bit, and then it starts to work less well. When it starts to work less well, it's often more economic to simply replace, rather than repair.

I agree with Chris that, on the assumption that this is not a new rental property, the expenditure is allowable.

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Replying to Duggimon:
Chris Caspell CTA TEP
By ccaspell
02nd Aug 2018 16:56

This is indeed a bit of a silly argument - one of semantics more than anything. Of course if anything is replaced, technically it is an improvement, but I am only interested in the tax aspect, which I think is the OP's point.

HMRC's Property Income Manual PIM2030 says:

"Sometimes the improvement may be so small as to count as incidental to a repair. In the absence of other capital indications, the entire cost is then revenue expenditure."

My guess is that, providing I am not replacing my noisy fan with a £20k air-con system, I think we can safely say the improvement is small and I will get a revenue deduction for the replacement.

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The triggle is a distant cousin of the squonk (pictured)
By Triggle
02nd Aug 2018 17:08

I find that enhancement is a better word than improvement when explaining this principle to clients.

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Replying to Triggle:
Portia profile image
By Portia Nina Levin
02nd Aug 2018 17:16

Well, you've completely fuching lost me!

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Replying to Portia Nina Levin:
Chris Caspell CTA TEP
By ccaspell
02nd Aug 2018 17:32

Then my work here is done :)

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Replying to Portia Nina Levin:
The triggle is a distant cousin of the squonk (pictured)
By Triggle
02nd Aug 2018 17:48

Well, Portia, I can only put it down to the warm weather. And what have I told you about swearing?

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Replying to Triggle:
Chris Caspell CTA TEP
By ccaspell
02nd Aug 2018 17:54

Perhaps Portia needs my fan...now is it revenue or capital...I think I may need to refer to Odeon Cinemas :-p

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By Tax Dragon
02nd Aug 2018 21:14

Odeon notwithstanding, there is a vital caveat on the middle of that banter. Repairs make good delapidations that have occurred in your period of ownership.

The OP would do well to read Portia's comment at 16:45 with due care and attention.

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By petia_kit
02nd Aug 2018 21:47

thank you for the discussion! yes , I was just tryin to make it better for the tenants with the same rent. no real high tech improvements :).

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