I have a client who in this tax year has incurred legal fees in this tax year for a property which was rented out in the last tax year. The tenant had rent arrears and had left the property in a state. The client had to incurr legal costs to get the tenant evicted and now repair costs to the property. The client has now decided to no longer rent out the property and has moved into the property herself.
As there is no longer any rental revenue (this was the only property which was rented out), there is nothing to offset these costs against. Are these costs now a loss to her, and the HMRC rule of losses carried forward are lost as they can not be offset against any other income, unless the property is rented out in the next three years. Or should we look at getting last years tax return re-opened to claim these cost and get her tax return for last year?