Tax relief on repairs not improvements for landlords

cganesh

PS. It didn't even have curtain poles, so I regarded them as essential before letting. Most of the 'improvements' will help it to let I'm sure so no worries if I can't claim, just wanted to get it right and get what I am entitled to.

00ec25

cganesh wrote: »

Thanks, they are trivial I guess but still add up to over a grand, so that was why I asked. So is capital expenditure not claimable at all at any time or does it add on to the house purchase price and count against CGT when selling?

sorry I assumed you would make the logical connection

if it is classed as capital expenditure then it is added to the purchase costs of the house and is claimed as part of your C(apital)GT calculation

clealry therefore people always want to make items revenue whenever possible since they get the relief against that year's trading profit whereas they have to wait until its sold before they get the capital relief

AlexMac

I have in the past found guidance on HMRC's website about what is
-CGT-allowable (and therefore only claimable by adding these costs to the purchase price to offset CGT when you eventually sell the rental property) as opposed to
-routine repair and maintenence (which you add to other costs such as Ground Rent, insurances, Loan Interest, Legal/management fees, Services & wages and if furnished the 10% wear n tear allowance as well as any other costs such as admin and transport) to offset against rental income, report in your annual self-assessment and thus, the tax you pay that year...

But- the HMRC search index is so awful I can't find anything now!

So, to reply to your OP, as a small LL of 16+ years, I always include stuff you mention, like
-"curtain tracks and curtains... a cooker hood... replaced some old light fittings with new ones... re-painting and travel..."
in my annual return. I regard these as repairs, and I have only saved up the invoices for the £10k cost of a major re-fit of the bathroom and kitchen for eventual future CGT offsetting.

From my perspective, it's better to do this as £1k or repairs equals £200 of tax saved now (more if you pay tax at higher rate), whereas the CGT saving is way off in the future.

Once you register for self assessment the notes are helpful, and you'll probably just be invited to submit a simple summary of expenses (altho' I keep every invoice I can, and estimate mileage based travel costs)

cganesh

Thanks to both, I think I understand now, sorry, I am a novice. Keep getting different info ( example- Alexmac DOES claim all those things as repairs!) but I think as long as I get it back somehow (or the tax I mean) even if its only when I sell, that's ok. These tax web-sites are confusing !

Halle71

It seems as though there are a lot of grey areas and is sometimes hard to find a definitive answer on what is or isn't (income) tax deductible.
I assumed that the work we did to get our BTL ready for letting would be tax deductible - mainly decorating because once the house was empty it was worse than we thought, and new carpets where the old ones were worn out, but now I'm not sure because these were completed before the tenancy started. But the insurance was also started prior to the tenancy and surely this is tax deductible?