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    • John in Camden
    • By John in Camden 10th Jan 18, 11:35 AM
    • 11Posts
    • 8Thanks
    John in Camden
    Tax query on letting
    • #1
    • 10th Jan 18, 11:35 AM
    Tax query on letting 10th Jan 18 at 11:35 AM
    Can someone advise, please?
    My wife owns a house in which her mother lived for many years before her death last year.
    The house has undergone extensive repairs and renovations: a new roof was needed, re-wired, replacement central heating boiler, new kitchen, etc.
    The house is now in a lettable condition awaiting a tenant.
    Assuming a tenant starts paying rent in the tax year 2017-18, from which agents fees, etc may be deducted, can necessary repairs & renewals costs be carried forward to offset rent received in the 2018-19 tax year?
Page 1
    • agrinnall
    • By agrinnall 10th Jan 18, 1:29 PM
    • 20,321 Posts
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    • #2
    • 10th Jan 18, 1:29 PM
    • #2
    • 10th Jan 18, 1:29 PM
    I'm sure that someone who knows more about this than me will give you a definitive answer, but I believe that the costs you describe cannot be used to offset tax on rental profits, but can be used to offset Capital Gains Tax when your wife comes to sell the property.
    • laticsforlife
    • By laticsforlife 10th Jan 18, 2:36 PM
    • 1,203 Posts
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    • #3
    • 10th Jan 18, 2:36 PM
    • #3
    • 10th Jan 18, 2:36 PM
    I think it'd be different if you were advertising to let from Day1, and were then doing it up, but as you've not (at least I'm presuming you've not) then what you've done is bring it up to the level of rental potential it now has, so as agrinall says I too think these are Capital and simply bring it back to 'normal', they are not repairs.

    everything you've listed are still 'connected' to the building so will reflect in a sale price if you were to sell, hence why they can be taken from a sale price in a Capital Gains calculation but not against the rental income.
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    • Pennywise
    • By Pennywise 10th Jan 18, 2:44 PM
    • 10,203 Posts
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    • #4
    • 10th Jan 18, 2:44 PM
    • #4
    • 10th Jan 18, 2:44 PM
    Your mistake was doing the renovations before it was rented out. As said above, it's "capital" to bring it up to standard before renting it out. What you should have done was to do the bare minimum to make it rentable/habitable, and rent it out for 6 months on a low rent (due to it's poor condition). If you'd done that, the major renovations after the first rental and before the second would have been allowable costs for income tax.
    • Mahsroh
    • By Mahsroh 15th Jan 18, 1:38 PM
    • 339 Posts
    • 330 Thanks
    • #5
    • 15th Jan 18, 1:38 PM
    • #5
    • 15th Jan 18, 1:38 PM
    Agree with the other comments. What you describe is deemed capital expenditure and therefore, not an allowable expense.

    As a general principle though, to cover your query regarding "offsetting" the rental income. If you have any allowable expenses from repairs / maintenance then I'm 99% sure these have to be included in your return in the year that they were incurred, however, you can carry forward losses from a previous year, so for example:

    17/18 Rental Income: 5,000.00
    17/18 Allowable Expenses 7,000.00
    Profit (loss) (2,000.00)

    18/19 Rental Income 5,000.00
    18/19 Allowable Expenses 2,000.00
    Profit (loss) 3,000.00

    Overall taxable income for 18/19 = 1,000.00. (18/19 profit less 17/18 loss).

    I think I've interpreted your question correctly, so I hope this helps, but as others have stated, the specific repairs you have described are a capital expenditure and therefore cannot be claimed as an expense anyway.
    • John in Camden
    • By John in Camden 19th Jan 18, 12:25 AM
    • 11 Posts
    • 8 Thanks
    John in Camden
    • #6
    • 19th Jan 18, 12:25 AM
    • #6
    • 19th Jan 18, 12:25 AM
    My thanks to all who responded,
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