Expenses from previous tax year for renting out rlst 14 January 2020 at 6:25PM edited 30 November -1 at 12:00AM in House Buying, Renting & Selling 9 replies 376 views

eddiejones

Hi folks,

I bought a flat early in 2019 but ending up having to move elsewhere before living there.
It needed a new water tank, shower system which I had completed in early April 2019 (April 3), and I started renting it out in May.

Any idea if I can offset that expense against the rental income for the 2019-20 tax year?

Thanks,

Ed

need_an_answer

So these were expenses you incurred before renting the property?

eddiejones

A rental had been agreed, and it discovered that the shower didn't work.

I guess from your question that in principle yes, I can ��.

need_an_answer

Actually I would say potentially you cant claim it as an expense as you were not renting at the time,but if you wish to claim that rental was underway that's your call.

eddiejones

Ok, so in theory offsetting expenses over tax years is OK? That's all I was asking really.

eddiejones

I guess https://www.investorschronicle.co.uk/pf-matters/2017/11/30/the-buy-to-let-expenses-minefield/ explains it OK. Agree it's a bit murky.

00ec25

eddiejones wrote: »

Ok, so in theory offsetting expenses over tax years is OK? That's all I was asking really.

then you need to do more reading since the property was intended to be your main home and is now your main home therefore such costs cannot be offset against rental income in full as only part of the cost relates to the business use period as the cost is not wholly and exclusively business related

eddiejones

Right. It's not my main home, and won't be again. It was bought initially with that idea... Well at least, early on in the buying process.

pramsay13

If there are expenses incurred in getting a property ready for rental they can be offset against income from that property, even over tax years.

Be careful you are not including capital improvements.

00ec25

eddiejones wrote: »

Right. It's not my main home, and won't be again. It was bought initially with that idea... Well at least, early on in the buying process.

OK I misread your opening line where it said "before living there" - so you meant you lived elsewhere instead of "there"

pre taxing revenue repair expenses are allowed if incurred in the period 7 years prior to the start of the rental business

if you are not going to use an accountant to make sure you get the capital and revenue costs split correct then you need to do a vast amount of reading if you intend to DIY your tax return

Here is the manual
https://www.gov.uk/hmrc-internal-manuals/property-income-manual

here are the commencement rules
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2505

spend a lot of time learning what is, and is not, a tax deductible "repair" and then learn what is a tax deductible non repair expense (crucially interest, if applic )
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2020