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Revenue expense query - dilapidated buy-to-let

Are there instances where some expenditure on a dilapidated new BTL can be treated as revenue?

A terraced house was purchased as a buy-to-let at a discounted price due to its dilapidated stated. A pretty much full refurb was undertaken, including new electrics, plumbing, damp proof course, plastering, kitchen & bathroom etc. In addition, all internal doors were replaced, as were 3 windows and an external door.

I accept that the majority of this is going to be capital (and suspect in fact all of it will be), however is there any argument to justify that some elements of the work was to increase the rentability of the property by replacing some components with modern equivalents - e.g. all of the internal doors, the one external door and the three windows - on the basis that they didn't have to be replaced, but were done so to be in keeping with everything else that did have to be refurbished, and therefore increase the rentability of the property? We are talking £1,250 out of a total refurbishment cost of £22,500.

I am of the opinion that all the redecoration and carpets/laminate flooring is not allowable as it is all a necessary expense following the extensive refurb, and therefore has to be considered as part and parcel of it (along with the fact that new carpets fitted in new rental properties don't appear to be allowable anyway), but don't want to disallow the doors & windows that didn't need to be replaced, but were.



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21st Jan 2018 16:11

Possibly there are instances where revenue treatmnent is justified but I can't think of one offhand.

The general theory is that the buyer got the asset cheap because of its condition. If the work had been done by the vendor and the asset was in good condition when sold, it'd've cost more.

Why are you replacing the doors ? To increase the chances of renting it or to increase the rent chargeable. It's not repair for mine. Just my opinion, though.

Thanks (1)
By Colinc
21st Jan 2018 18:31

Was it let prior to being bought?
Or was it empty?

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to Colinc
21st Jan 2018 20:00

It was empty.

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to djpaterson
22nd Jan 2018 07:29

You can read a lot into that.

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to lionofludesch
22nd Jan 2018 11:29

To save reading anything into it:

Previously occupied for around 50 years by owner/occupier who died. Was a heavy indoor smoker with the obvious effects that has on a property, and house had some other issues, including leaking roof and damp as had quarry tiles laid directly onto mud floor (typical of some 100-year old houses). Some improvements had been carried out by previous owner, including double glazing to majority of house, new front door and modern combi-boiler fitted.

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to Justin Bryant
22nd Jan 2018 19:56

Thanks, Justin. I had already read the PIM; it just didn't answer my particular question.

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