Income tax & rental income?

SimonWatson

We are about to rent our home out for a couple of years, through an estate agent.

In order to get the house ready, we probably have about £4k of work to do first. Can this be off-set against rental income for tax purposes?

Many thanks

sammyjammy

https://www.which.co.uk/money/tax/income-tax/tax-on-property-and-rental-income/allowable-expenses-and-allowances-atdn93l9wyqp

SimonWatson

Great link: many thanks for such a quick response!

caprikid1

Welcome to the world were Landlords work for nothing, but hey were the bad guys.

The before and after caveat
A particularly blurry area is pre-letting costs. When preparing your first tax return for your lettings business, you have to sort your costs into those that are preparatory to letting and those that are part of letting. Generally, the costs of getting a property ready for letting will not be allowed, because most of these costs will be classed as capital expenditure or will fail the ‘replacement’ test. For example, you buy a new carpet to replace an unattractive one in a property you have bought to let. But replacing a carpet will only be counted as a replacement once the letting commences, and although you are in fact replacing a carpet, for the purposes of the letting business it counts as an initial purchase. The same rule will apply to all furnishings and furniture you buy. “An item purchased for the first time does not qualify for any relief,” says HMRC.

Comms69

SimonWatson wrote: »

We are about to rent our home out for a couple of years, through an estate agent.

In order to get the house ready, we probably have about £4k of work to do first. Can this be off-set against rental income for tax purposes?

Many thanks

Why would you need £4k of work. That seems totally unnecessary if you've been living in the property.

caprikid1

Comms69 wrote: »

Why would you need £4k of work. That seems totally unnecessary if you've been living in the property.

Often Landlords like to present a property to perspective tenants in a high standard.


Many good landlords will fix items straight away for tenants that they would put up with for years in their own house , its often a similar process to selling.


Also when renting a house for the first time, many people find it easier to get as many potential maintenance areas resolved prior to tenants moving in as its easier. A tip top house can make for a smoother transition for a new landlord.

theartfullodger

There are more than 10 taxes a landlord may pay: Just worrying about income tax may mean you are missing savings elsewhere. Buy a book on property tax & save more in time & money than it costs you: e.g.

https://www.amazon.co.uk/gp/product/1911020331

SimonWatson

caprikid1 wrote: »

Often Landlords like to present a property to perspective tenants in a high standard.


Many good landlords will fix items straight away for tenants that they would put up with for years in their own house , its often a similar process to selling.


Also when renting a house for the first time, many people find it easier to get as many potential maintenance areas resolved prior to tenants moving in as its easier. A tip top house can make for a smoother transition for a new landlord.

Precisely the situation. I can ignore my wife's complaints but want to make the house rental quickly at the right rates.

Comms69

SimonWatson wrote: »

Precisely the situation. I can ignore my wife's complaints but want to make the house rental quickly at the right rates.

Just think you need to be mindful that the investment you make now, will realistically take a long time to pay off, by which point wear and tear will result in you having the same situation.


£4k is a lot of redecorating, but each to their own. Not my place to tell you how to spend your money

ognum

Are you planning on moving back in, if so don’t let your home.

LadyDee

I'm watching a programme about landlords and tenants now, and I think it's disgraceful that decent landlords can be made bankrupt by bad tenants - months of no rent paid, months of trying to get them out, then weeks and weeks before the bailiffs can attend, left with a property which can be destroyed, more thousands to spend putting things right.

Who would choose to be a landlord? I'd rather sell up and put the money in premium bonds!

If you are a one property landlord, and especially if you will rely on the rental income, watch Slum Landlords & Nightmare Tenants, and then decide if it's for you.