Rental Houses - Allowable Expenses/Deductions
Discussion
Due to the low interest rates this last year I've made much more profit than normal (it's normally nominal) so am faced with a rather large tax bill to pay 
Was having a discussion with a mate the other night about what expenses were allowable and what weren't....he was insistent capital items such as a boiler, new windows and a kitchen etc would be allowable on top of the normal 10% wear and tear allowance ?
Can anyone clarify ?
Would rather plan a bit better this if the above is true and spend all the tax I would have to pay on improving the houses.
I know things like white goods and carpets aren't allowed as they are deemed maintenance (IIRC) but wondered about those things which are part of the fabric of the house and can't (easily) be rmeoved...
Cheers
Was having a discussion with a mate the other night about what expenses were allowable and what weren't....he was insistent capital items such as a boiler, new windows and a kitchen etc would be allowable on top of the normal 10% wear and tear allowance ?
Can anyone clarify ?
Would rather plan a bit better this if the above is true and spend all the tax I would have to pay on improving the houses.
I know things like white goods and carpets aren't allowed as they are deemed maintenance (IIRC) but wondered about those things which are part of the fabric of the house and can't (easily) be rmeoved...
Cheers
As far as I am aware you can either claim 10% of your rent per year as a wear allowance,or claim for everything which would involve invoices and proof of purchases, you should make this choice when you start renting your property,
Capitol expenditure which is to enhance the value of the property like an extension, conservatory, etc can't be claimed for, but keep your bills as this is deductible off your capital gains tax when you come to sell the property. I think you can claim for essential maintenance on top of your 10 % such as a broken boiler being fixed etc. You can also claim for your gas safe certificate, house insurance,energy rating certificate, agency fees, advertising fees looking for a tenant,
Don't forget you don't pay tax on the interest off the mortgage on the property or if you haven't one on your rental property but you have on your own home, then get a mortgage on your rental property mainly interest payments and use the money to pay off your mortgage on your main property. I personally believe you should always try and release the capitol money from your rental properties and re-invest it on new properties. I think they will only loan about 60% of the value of the property. if you search on the internet there are landlord forums which can help you with these types of questions.
Capitol expenditure which is to enhance the value of the property like an extension, conservatory, etc can't be claimed for, but keep your bills as this is deductible off your capital gains tax when you come to sell the property. I think you can claim for essential maintenance on top of your 10 % such as a broken boiler being fixed etc. You can also claim for your gas safe certificate, house insurance,energy rating certificate, agency fees, advertising fees looking for a tenant,
Don't forget you don't pay tax on the interest off the mortgage on the property or if you haven't one on your rental property but you have on your own home, then get a mortgage on your rental property mainly interest payments and use the money to pay off your mortgage on your main property. I personally believe you should always try and release the capitol money from your rental properties and re-invest it on new properties. I think they will only loan about 60% of the value of the property. if you search on the internet there are landlord forums which can help you with these types of questions.
Turbo5 said:
As far as I am aware you can either claim 10% of your rent per year as a wear allowance,or claim for everything which would involve invoices and proof of purchases, you should make this choice when you start renting your property,
Capitol expenditure which is to enhance the value of the property like an extension, conservatory, etc can't be claimed for, but keep your bills as this is deductible off your capital gains tax when you come to sell the property. I think you can claim for essential maintenance on top of your 10 % such as a broken boiler being fixed etc. You can also claim for your gas safe certificate, house insurance,energy rating certificate, agency fees, advertising fees looking for a tenant,
Don't forget you don't pay tax on the interest off the mortgage on the property or if you haven't one on your rental property but you have on your own home, then get a mortgage on your rental property mainly interest payments and use the money to pay off your mortgage on your main property. I personally believe you should always try and release the capitol money from your rental properties and re-invest it on new properties. I think they will only loan about 60% of the value of the property. if you search on the internet there are landlord forums which can help you with these types of questions.
It is not what property the mortgage is borrowed against, more why the monies is/are borrowed, so one can raise a mortgage against one’s private home, in order to invest/buy a by to let, the interest on that loan/mortgage is then tax allowable. Capitol expenditure which is to enhance the value of the property like an extension, conservatory, etc can't be claimed for, but keep your bills as this is deductible off your capital gains tax when you come to sell the property. I think you can claim for essential maintenance on top of your 10 % such as a broken boiler being fixed etc. You can also claim for your gas safe certificate, house insurance,energy rating certificate, agency fees, advertising fees looking for a tenant,
Don't forget you don't pay tax on the interest off the mortgage on the property or if you haven't one on your rental property but you have on your own home, then get a mortgage on your rental property mainly interest payments and use the money to pay off your mortgage on your main property. I personally believe you should always try and release the capitol money from your rental properties and re-invest it on new properties. I think they will only loan about 60% of the value of the property. if you search on the internet there are landlord forums which can help you with these types of questions.
Your post gave a lot of very good advice, but also as a landlord of several buy to let properties, I use my partner’s/wife’s personal tax allowance, to reduce mine/our overall tax bill. I also include/deduct an allowance for the use/running costs of one room in my home for operating the buy to lets, a percentage of my home/mobile telephone bill/s, a percentage of fuel and vehicle repair/running costs, in fact any other expense that I incur in the running of the buy to lets.
Edited by Wings on Thursday 29th April 13:39
Mmmm, I've been renting for 10 years now (so know all about interest, gas safety, wear and tear, insurance etc) but this is the first time I've had a bill and only now due to low interest rates.
The HMRC website whilst a tad vague suggest that you can claim the 10% wear and tear AND also replace certain things like windows, bathrooms etc and deduct that too, but that doesn't seem right to me.
The HMRC website whilst a tad vague suggest that you can claim the 10% wear and tear AND also replace certain things like windows, bathrooms etc and deduct that too, but that doesn't seem right to me.
uuf361 said:
Mmmm, I've been renting for 10 years now (so know all about interest, gas safety, wear and tear, insurance etc) but this is the first time I've had a bill and only now due to low interest rates.
The HMRC website whilst a tad vague suggest that you can claim the 10% wear and tear AND also replace certain things like windows, bathrooms etc and deduct that too, but that doesn't seem right to me.
The 10% Wear and Tear Allowance relates to furniture and fittings. It does not relate to work on the fabric of the building itself.The HMRC website whilst a tad vague suggest that you can claim the 10% wear and tear AND also replace certain things like windows, bathrooms etc and deduct that too, but that doesn't seem right to me.
Upgrading/improvements, renewing a kitchen/windows/bathroom are a capital tax allowances, repairs, for example replacing a kitchen or bathroom that had either got damaged through flooding or vandalism would an income tax allowance.
The 10% allowance is only deductible on a fully furnished letting property, one would not be able to claim the allowance on a property that just had carpets and/or curtains in.
The 10% allowance is only deductible on a fully furnished letting property, one would not be able to claim the allowance on a property that just had carpets and/or curtains in.
uuf361 said:
This is where it's vague.....i.e. I have wooden windows which I can argue are rotten and therefore replace them with UPvC windows but the HMRC would seem to allow this as repair as they accept that they are substantially the same......
When I was studying tax, the example we were always given of a rental repair cost that would NOT be allowed was when one part of the structure was replaced by something which was a significant improvement. Replacing wooden windows with wooden windows would be allowed,
Replacing wooden windows with uPVC double glazed windows would not.
Eric Mc said:
uuf361 said:
This is where it's vague.....i.e. I have wooden windows which I can argue are rotten and therefore replace them with UPvC windows but the HMRC would seem to allow this as repair as they accept that they are substantially the same......
When I was studying tax, the example we were always given of a rental repair cost that would NOT be allowed was when one part of the structure was replaced by something which was a significant improvement. Replacing wooden windows with wooden windows would be allowed,
Replacing wooden windows with uPVC double glazed windows would not.
Atitudes change over time. I think perhaps they have adopted an "environmental" stance on this. Double glazing, in theory, should reduce light and heat requirements. Another example would be the replacement of an old boiler with a more modern type.
At the end of the day, if the cost incurred is "reasonable", then HMRC will not raise a fuss. Building an extension and claiming it as a "repair" would not be "reasonable".
At the end of the day, if the cost incurred is "reasonable", then HMRC will not raise a fuss. Building an extension and claiming it as a "repair" would not be "reasonable".
Eric Mc said:
Atitudes change over time. I think perhaps they have adopted an "environmental" stance on this. Double glazing, in theory, should reduce light and heat requirements. Another example would be the replacement of an old boiler with a more modern type.
At the end of the day, if the cost incurred is "reasonable", then HMRC will not raise a fuss. Building an extension and claiming it as a "repair" would not be "reasonable".
Agreed LOL. Shame though!At the end of the day, if the cost incurred is "reasonable", then HMRC will not raise a fuss. Building an extension and claiming it as a "repair" would not be "reasonable".
Can only use that to reduce CGT when the time comes to sell.....
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