Unfurnished let, allowable expenses for repairs

Rural_Puppy

Hello
Doing the tax return for income from let property. Trying to get my head around what is an allowable expense against income tax, and what is a capital expense.
Reading this guidance: https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim46911
The final example "refitting an existing kitchen" seems to fit with my circumstances. However I would be pleased if someone could help me sanity check my understanding.

My second letting property required refurbishment before letting. This had previously been my principal home. It had been for sale, but the sale fell through, and I decided to let it instead. (NB I was already receiving income from another BTL, so my understanding is that my "letting business" has commenced, even through the second property was not let.)

I converted the mortgage to a BTL loan, took out landlord insurance, prepared the property with an electrical certificate and smoke alarms etc.
Refurbishment included replacing carpets, a new shower screen, and some repairs to the fitted kitchen, as well as gardening.
I believe that replacement carpets are OK, as is the replacement shower screen as the old one was damaged.
The kitchen repairs I am not sure about.
The fitted kitchen contained an inset hob and sink that were damaged and required replacement. In doing so, the worktop needed to be replaced as the new hob and sink did not fit in the holes in the old worktop. the old worktop was also damaged by water around the sink, and beyond repair.
Old worktop was laminate, new worktop also laminate just a different colour.
Are the costs of replacing the worktop, hob and sink allowable expenses?

At the same time, the old fashioned handles on the fitted units were replaced for more up to date ones. One of the old handles was broken, and a matching one was no longer available.
Is the cost of replacing all the handles on the units an allowable expense, or just the broken one? The replacements were of similar value as the original ones, I would think, just a slightly different design.

Gardening
The property has a reasonable piece of land with it, around an acre. the lawn area required strimming, for which I bought a petrol strimmer. Is the cost of the purchase of the strimmer and petrol to use it an allowable expense?

As a further complication to the saga, the property was advertised for rental for several weeks, but before a suitable tenant could be found, an unexpected family illness required a change of plan and I had to return to live in the property for several months instead. After I moved out for the second time, the property was subsequently marketed for sale.
Is any of this likely to cause HMRC to raise any eyebrows?
Thank you!

00ec25

so you have zero rental income for a property that was marketed for let but never actually let.


you are able to mask that position by virtue of having a second property that is let and producing an income?

Rural_Puppy

Yes. Am I correct that this is a legitimate manner to proceed?

BoGoF

Rural_Puppy wrote: »

Yes. Am I correct that this is a legitimate manner to proceed?

I think the insinuation is that you will be seen to be 'at it'

Rural_Puppy

This is my point. I can absolutely see how it might "look".
However, at the time, the full intention was to let the property and it was prepared accordingly, with expenditure incurred that I think would usually be allowable.
The issue was that a family member took ill unexpectedly that involved an extended hospital stay. I therefore has to move back to care for them when they were discharged, as my new home was some distance away.
I am interested in what view HMRC might take. Thank you.

BoGoF

The line in your OP that catches my attention "

"property was advertised for rental for several weeks, but before a suitable tenant could be found,!"

Several weeks? No suitable tenant?

Can you show you were living elsewhere during the period you moved back in? How was it advertised for let? How many 'unsuitable' applicants.

Lets be honest anyone in your situation could say what you have and the reality could be their sole intention is to do up the property for sale whilst claiming a deduction. If challenged onus will be on you to show it was a genuine venture

Rural_Puppy

I can see your point. The house is quite a large one in a rural location, with a high rent, and not in an area with a ready and waiting pool of prospective tenants for that type of property. I was indeed living elsewhere and have evidence of that. The period between taking the house off the rental market, and then remarketing it for sale, is nearly a year. Not sure how relevant that is though.

I am also interested in the answer to my original question about allowable expenses too. Thanks.

BoGoF

Not sure if you deliberately didn't answer some questions?

How was the property adverised for rent? Can you evidence such as estate agents bills? Were there any applicants?

Rural_Puppy

An agent advertised the property for let. There were enquiries and viewings but the prospective tenants did not manage to pass the agent's checks.
It is not unusual for a property like that one to take a few weeks for a suitable tenant to be found due to size and location.

My understanding is that it is the "intention" that HMRC would look at. On the evidence, the intent to let the house is clear, eg conversion to BTL mortgage, (paying a large fee in the process), ensuring property complies with letting legislation ie electrical certificate, smoke alarms etc -again incurring electrician costs in the hundreds. Engaging an agent to manage it.
Why bother going to all that trouble if the genuine intention is not to let the house at all?
It would have been let if it were not for the very unexpected circumstances of the sudden illness of a family member (all of which can also be evidenced if required.)

My original question relates to the cost of repairs to the kitchen and whether these expenses are capital or income.
Can anyone help? Thank you.