uk tax question when 2 properties

cozzyman

hi quick question

ive had a rental property for a few years but just bought a second at end of last year but it needs a bit of work done to it my question is if house A gives 6k rent and house B gives zero rent and i spend 4k fixing it up do i just pay tax on the 2k difference ?

Im living in a third property btw

Mahsroh

There are a number of question here.... firstly what does "fixing it up" consist of it? It's questionable whether these are allowable expenses to deduct from your taxable rental income or whether it's Capital expenditure meaning you can't (although you can deduct it from your profits when declaring capital gains tax when you eventually sell). 

Additionally, if you bought late last year and it's empty i'm guessing you've not had tenants in it yet, in which case, the likelihood of being an allowable expense is less still... below is the guidance for this situation copied and pasted from gov.uk

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"If you carry out work on a property before leasing or renting

Some costs of work on a property before you lease or rent it will be capital expenses, and therefore not allowable expenses. This includes if you buy a property in a derelict or run-down state, and either you paid a substantially reduced price for it or it was not in a fit state for rental.

Any works done to put it back into a fit state for letting are unlikely to be repair works. They will be capital works as they will improve the property. The costs for these works will not be an allowable expense."

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Generally speaking, if you own more than one rental property you should treat as one business and add all income together and all expenses together, so on that basis the simple answer to your question ordinarily would be yes, the remaining £2k would be taxable using your simple example. However, As per the above, I question whether that £4k is an allowable expense but without more detail it's impossible to say definitively. 

cozzyman

hi thanks for the reply
id say its not allowed as there havent been any tenents in it yet
the repairs would be things like faulty back door replaced or new kitchen

theartfullodger

There are more than 10 taxes a landlord may pay.  IT & CGT etc etc.  You need to keep records until you sell for CGT - could be 30 years.  What you describe could be different taxes with different allowances.

Buy a book on property tax, read it, read it again then reconsider.

dimbo61

Maybe use an accountant.
If the property has a kitchen but it's old and not " fit for habitation "" then you can replace as an expense.
Fitting Fire doors, mains wired smoke alarms, replacing a bathroom with a new bathroom before renting. Capital expense would be building an extension or adding another bathroom/bedroom.
Repair, Replace, Renew.
Replacing single glazed wooden windows with new uPVC windows is classed as replacement and NOT capital expenses.
Better insulation, Fire safety, security, convenience etc