Allowable expenses for landlords?

Clarita

Hi,

Me and my boyfriend are in the process of buying a leasehold flat. We are buying with a residential mortgage but the plan is not to move in straight away but rent it out for a year. This will let us save up to re-decorate before we move in. We will be informing our mortgage lender of this when we start renting it (and are prepared to pay a fee to them).

I am self-employed and starting to fill in my first tax return and I was thinking what we would be able to claim as expenses.

I know we can claim the interest on the mortgge, but not the morgage itself. Other than this I'm not sure. Can we claim the costs associated with buying the flat (solicitor, survey, mortgage broker fee, etc). Also, do we each have to file a tax return for this or can we do a joint one?

Thanks.

fengirl_2

You will each need to declare your half share of the rental income on your own SA's.
You can claim any expenses incurred in connection with the letting, but not capaital items. The costs of buying the property will be set against your CGT liability when you eventually sell.
Other expenses might be agents letting fees, ongoing repairs and 10% wear and tear if it is let furnished.

Clarita

Thanks fengirl,

To be honest I don't really understand what "Capital items" are when it comes to property. I assume the cost of the flat(deposit + mortgage amount) is a capital item but are the other associated costs of buying the flat also capital items?

Also can we claim the costs of painting the walls, laying new carpet an replacing the bath prior to renting it as expenses?

fengirl_2

Yes, anything to do with buying the flat is counted as capital as it goes towards reducing your CGT liability.
The costs of putting the property in a state to be let are not allowable but, as I have said, repairs and renewals are allowable. The bathroom will go against your CGT when you sell.

Clarita

Thanks, I understand more now

fengirl wrote: »

The costs of putting the property in a state to be let are not allowable but, as I have said, repairs and renewals are allowable. The bathroom will go against your CGT when you sell.

Dos this apply still even though the property is compltely rentable at the moment but we want do just re-paint, etc to get more rent/better tenants? Wouldn't this come under repairs/maintanance or am I just being cheeky here?!