Self Assessment - what to include

[Chocs]

Hi, I'm a first time landlord filling in my first time self assessment tax form, so apologies if these are stupid questions, have had a look through forum but couldn't find conclusive answers.

My sister and I jointly inherited a flat complete with tenant last summer, I bought her half so now own it all. Can I claim legal fees for this purchase?

Six months later the tenant trashed the place and left. At that time I had received £3200 in rent. Following the tenant's departure the costs of putting it all right again, repairs, decoration, reflooring throughout (she'd had a dog in there), new locks, (didn't bother to refurnish, now let as unfurnished), anyway these costs came to considerably more than I'd had in rent. I did the cleaning myself. These works were all done round about end March, April, so some within 17/18 tax year. I think I can claim for direct replacement (curtains, toilet seat etc). Can I claim for all the other work under repairs and maintenance and are these costs included in my return if they were incurred before 6 April, of if paid before 6 April? Can I claim for the cleaning I did myself and eg the special uplift to take away all the broken furniture we lugged down the stairs?

Then costs of getting new tenants - safety checks, new smoke alarms, agency to advertise and do paperwork etc. I know I can claim for the let only service, but can I claim for the checks - gas, EICR, legionella etc and additional work required to bring up to new standard?

Grateful thanks to anyone who can advise.

[jpkeates]

You can't claim for the legal fees for the purchase against income - you can claim them when you sell the property (assuming the tax rules are the same then as they are now). The legal fees are a capital item, not a revenue item. If you took out a mortgage to fund the purchase, fees associated with the borrowing are allowed (but are capped).

There are two ways of completing a tax return. On a cash basis or an accrual (accounting) basis. For the cash basis, you account for income when it's actually received and costs when they are paid. On the accrual basis you show income when it's due (whether it's paid or not) and costs when they're committed, not when they're paid.

You can't claim for your own labour or time.

All of the costs that are incurred solely and exclusively for the business are allowed. Unless I've missed something, everything you've listed can be offset against income. As this will result in a loss, you want to carry forward that loss into the next tax year, so you can offset it against the next year's income.

[Gordon999]

Your tax return for 2017/2018 to report rental income would include the rental income of £3200 and expenses paid to cleanup incurred up to April 5th. and any loss in 2017/2018 is carried forward to next year's tax return. The bills paid for clean up in flat after April 6 are entered in the tax return for 2018/2019. The bills paid to service providers are allowable expense against rental income but charging for your own labour is not allowable expense. For the cost of writing off the value of broken furniture and taking away- you need to check with Hmrc's hotline.

The money paid to sister for half share plus the legal cost for transfer is "capital cost " and is not an expense which can be set against rental income. After you sell property in the future , you will deduct these costs from the sales proceeds to calculate the capital gains and you will be charged cgt.

[Chocs]

Thank you both very much, will get back to it today now i have a better idea what I'm doing! What a helpful place this is