Capital costs vs allowable expenses

norwood

Hi, I have a property that is let, when I bought it the property was in fair but shabby condition.

I did the usual, decorated throughout with new floorcoverings as well.

I replaced the bathroom, kitchen, boiler, windows, gutters & soffits.
.
My accountant says these are all capital costs, but it seems to me that they were simply replacement for wear and tear.

Can you please advise me what the situation is?

Thank you,
norwood

kingstreet

See the list Which! produces, or research the HMRC site;-

http://www.which.co.uk/money/tax/guides/tax-on-property-and-rental-income/allowable-expenses-and-allowances/

I suggest your points come under the "improvement" heading.

norwood

Thanks for your swift reply kingstreet, what mystified me was how returning a property to its original condition is rated as improvement.
I can see that fitting CH if it had none or a intruder alarm would improve it.
Seems strange that if I replace the boiler when it is empty it seems to be treated diffrently from if the boiler failed and was replaced with a tenant in:doh:

Regards,
norwood

lvm

Did you employ or pay a company to do this work for you?

Wonder if you are able to claim the labour costs as an allowable expense but the actual cost of items as capital?

Probably not but worth checking out I suppose!

norwood

Hi lvm, the boiler, double glazing, soffits, electrical work and garage door replacement were contracted out.
Regards,
norwod

tim123456789

norwood wrote: »

Thanks for your swift reply kingstreet, what mystified me was how returning a property to its original condition is rated as improvement.
I can see that fitting CH if it had none or a intruder alarm would improve it.
Seems strange that if I replace the boiler when it is empty it seems to be treated diffrently from if the boiler failed and was replaced with a tenant in:doh:

Regards,
norwood

Because it's an improvement to the property "as you bought it" and that condition reflected the price you paid.

if it came with those items looking as new, it would have cost you more to buy, - so they are CapEx.

OTOH, if you had to replace those items because your tenant trashed them, they are repairs

tim

anselld

It depends on the extent and nature of the repairs.

See PIM2020 "Repairs etc after a property is acquired"

Can you convince your accountant and/or HMRC that the need for these repairs was just part of the routine maintenance cycle and did not reflect significantly on the purchase price?

norwood

Thanks Tim,:beer: so the answer is buy property put a cheap tenant in for 6 months and chalk the refurb up to damage:rotfl:

Edit; thanks for the link anselld that suggests that painting might be allowable will give it a try anyway.

Best wishes to all:)
norwood