BTL expenses tax question

itwasntme001

If I were to do a refurbishment of my property during a tenancy, which finishes before the tenants leave, but then I do not to relet the property, can the costs of the refurnishment go towards expenses against BTL income for tax purposes?

FlorayG

Is it required refurbishment or just making it nicer and upgrading?

anselld

itwasntme001 said:

If I were to do a refurbishment of my property during a tenancy, which finishes before the tenants leave, but then I do not to relet the property, can the costs of the refurnishment go towards expenses against BTL income for tax purposes?

Yes if it is like for like refresh, not if it is improvement work (capital).

itwasntme001

Yes it is a refresh - new doors, carpets, walls painted etc.

Also will be installing sound proofing under carpets which is new as I have received complaints about noise.

Bookworm225

are you intending to move into it as your own home or are you looking to sell?

just because you claim the costs during a letting period may not mean those costs would survive an HMRC challenge depending on what happens next to the property (moving in - no; selling, yes but for CGT)

itwasntme001

Bookworm225 said:

are you intending to move into it as your own home or are you looking to sell?

just because you claim the costs during a letting period may not mean those costs would survive an HMRC challenge depending on what happens next to the property.

Looking to move in after the tenancy ends.  I would have thought since the works were paid for during the tenancy they should be fully allowable as an expense for tax.

Bookworm225

itwasntme001 said:

Bookworm225 said:

are you intending to move into it as your own home or are you looking to sell?

just because you claim the costs during a letting period may not mean those costs would survive an HMRC challenge depending on what happens next to the property.

Looking to move in after the tenancy ends.  I would have thought since the works were paid for during the tenancy they should be fully allowable as an expense for tax.

so you want tax relief on what is in reality a personal expense?
the rental business is ending, the expenses are not wholly and exclusively business related and should be disallowed (if investigated)

Post tenancy redecoration and repair costs - Community Forum - GOV.UK

PIM2510 - Beginning and end of a property business: cessation - HMRC internal manual - GOV.UK

FlorayG

I think this is unlikely to be allowed, since you are merely 'doing it up' for yourself but before the tenant leaves. Whether or not HMRC will pull you up on it of course is a different matter, you may be happy to take that risk

Grumpy_chap

itwasntme001 said:

If I were to do a refurbishment of my property during a tenancy, which finishes before the tenants leave, but then I do not to relet the property, can the costs of the refurnishment go towards expenses against BTL income for tax purposes?

itwasntme001 said:

Yes it is a refresh - new doors, carpets, walls painted etc.

Also will be installing sound proofing under carpets which is new as I have received complaints about noise.

The question may well be moot.

How, from a practical perspective, do you envisage undertaking these substantive works with the tenant in residence and not contravene the tenant's peaceful enjoyment of their home?

itwasntme001

If I need to pay out for repairs to damage caused by a tenant and these repairs occur soon after the tenancy ends (and that is the last tenancy and thus the BTL business ends), can I expense that against my income so tax deductible, whether or not I can deduct the amount for the repairs from the tenants' deposit?

anselld

itwasntme001 said:

If I need to pay out for repairs to damage caused by a tenant and these repairs occur soon after the tenancy ends (and that is the last tenancy and thus the BTL business ends), can I expense that against my income so tax deductible, whether or not I can deduct the amount for the repairs from the tenants' deposit?

If it is paid from the deposit then that would be an equal income and expense so net zero to deduct.  However if you have to pay to repair something like for like as a result of the tenancy but which you are unable to deduct from deposit then I can’t see why that would not be tax deductible.