Rental Property - Allowances Allowed?

oompahloompah

Hello
Apologies if this is the wrong board or if this has been answered many times before, but I'm new here.
I am about to complete a tax return for a rental property for the first time and need to make sure I am claiming everything I am entitled to.
I know about mortgage interest (not capital), wear and tear allowance of 10%, maintenance/factors fees, and costs while the property is empty (council tax, electricity) but can I claim the costs of replacing the windows, kitchen and bathroom and the cost of furnishing the flat - the wear and tear allowance doesn't nearly cover it.
Also is there anything else I'm missing?
Thanks and I love these boards - have been viewing a while but only just joined today :j

Icey77

Hi Oompahloompah,

Lets see:

Window replacement, kitchen and bathroom replacement - If these are done to bring the property up to the required standard for renting then these are seen as capital improvements which you can't claim the cost of. If you already have tenants in and these are repairs then they can be claimed.

Furnishings - These are capital improvements again which you can't claim. The wear and tear is to spread the cost of them over the life of the items. When they are replaced you can claim them as you will be replacing items already in existence rather putting new items in where there weren't any before.

I would suggest calling HMRC to get advise on any area of query - large deductions might raise an eyebrow on your first tax return.

Contrary to popular belief HMRC have specialists that really know their stuff! I made a right pest of myself when I was working out my tax return and had many a phone call with them questioning items and confirming details.

Good luck, if you have any other queries give us a shout.

PS - Don't forget to dig out your P60's, P45's, P11D's and all your bank statements as you will need them to complete the return. They cover all your usual income from your job and tax that you've paid, benefits you may be taxed on and your savings interest income - albeit you've already paid the tax you have to declare that you hav paid it :rolleyes:

PPS - Then pay the tax online, much easier and you KNOW that you've paid it. No chance of "We didn't receive the cheque in time and now you have to pay a £100 fine"

A_Nice_Englishman

Don't forget to keep records of the capital expenditure as these will reduce your CGT liability when you come to sell.

I would strongly recommend doing your tax return online as the software does all the sums and highlights potential problems as you go along.

Icey77

A_Nice_Englishman wrote: »

Don't forget to keep records of the capital expenditure as these will reduce your CGT liability when you come to sell.

Thanks for that reminder, I haven't got that far but will one day, unless I move into the property and use it as my PPR before I sell it

tbs624

Have a look here - http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10014027
and here : http://www.hmrc.gov.uk/manuals/pimmanual/index.htm

Good luck with your tax return!

A_Nice_Englishman

Icey77 wrote: »

Thanks for that reminder, I haven't got that far but will one day, unless I move into the property and use it as my PPR before I sell it

You would still be liable for any gains made before it was your PPR though