Allowable expenses on BTL first year

minimoocow

Hello all!

Just wondering of anyone can answer a quick query. I bought a BTL last year so now thinking about doing 1st tax return for it (informed inland revenue).

I'm fairly happy with what's ok as expenses on an ongoing basis - i.e. mortgage interest, 10% wear and tear (it's furnished), rates, advertising, maintenance bills etc.

But . . . as it's the first year I'm struggling with what is classed should be capital expenditure and therefore added to purchase price and what isn't (so can expense this year).

When we bought the place we:

Installed central heating (capital)
Did some electrical work to get it to rentable standard (capital)
Replaced kitchen units (expense - only about £150!)
replaced carpets (expense)
decorated (expense)

I have put my best guess in brackets - can somebody tell me if I am correct?

Thanks for any help anyone can give!

MMC

Bean_Counter

Have a look at this page from the HMRC website as it covers the 10% wear & tear allowance versus capital allowances.

http://www.hmrc.gov.uk/manuals/pimmanual/PIM3200.htm

minimoocow

Thanks bean counter - very helpful I had looked on the ir website but find it impossible to find the articles I need!

I think the article says I can't claim for the carpets as these come under furnishings which makes sense but what about the rest?

Installing extra kitchen cupboards and redecorating appear to be "maintenance" rather than capital expenditure as it was really replacing old with new and aren't really removable furnishings! - can I include these as an expense this year?

Also do you think I am correct about the heating/electrical work - i.e. it is an improvement to the property therefore should be added to purchase price for CGT if and when I sell rather than expensed this year?

Thanks

MMC