First time BTL - Questions about tax deductible items

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    First time BTL - Questions about tax deductible items

    Hi

    Im looking for a bit of advice on valid tax deductible items.

    We bought our first BTL property in April and have spent the last few months getting it ready to let. It’s had a replacement bathroom and kitchen and new carpets throughout as it was a state when we bought it.

    Am I right in understanding that as this work was done prior to us letting the property out we won’t be able to claim it on our tax return? The kitchen is not of a high quality but the layout is different. The bathroom is exactly the same layout and also a budget purchase.

    I had obviously hoped to offset as much as possible against our first tax bill on the property but the more I read the more it looks like we won’t be able to include much apart from mortgage interest and home insurance.

    #2
    Since you are spending before the letting business has started, I think most of your refurbishment cost will be considered captal expenditure.

    I suggest that next year, you seek assistance from accountant when you prepare your tax return.

    Comment


      #3
      Hi Gordon. We didn’t purchase the property until 12th April 2018 and the tenant isn’t moving in until the end of this month so my first tax return won’t need to be completed until January 2020 as there was no income in the 2017-18 period.

      We are planning on getting an accountant but I was keen to get more of an idea of what would be deductible.

      Comment


        #4
        Originally posted by Rickster1978 View Post
        Am I right in understanding that as this work was done prior to us letting the property out we won’t be able to claim it on our tax return? The kitchen is not of a high quality but the layout is different. The bathroom is exactly the same layout and also a budget purchase.
        If the work increases the value of the property significantly it's capital expenditure which is allowable against any gain on sale (assuming current tax rules prevail).
        If it's an operational cost, you were replacing what was there because it needed to be brought up to date or made safe, the expenses are allowable against income and are treated as being incurred on the first day of the first tenancy, provided they are less than six years in the past.

        Buying a property "cheap" and doing it up are probably a combination of capital and revenue and you would apportion the costs as appropriate.

        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          Rickster1978,

          When you purchased the property from the seller , did you agree on any separate figure for the fixtures and fittings ? Your accountant may be able to find ways to declare a loss for the disposal.

          Comment

          Latest Activity

          Collapse

          • Will I pay stamp duty?
            Bricko7
            So i was hoping for some good advice.

            Me and my girlfriend are looking to buy a house together, the problem is i already have a house of my own which i am renting out on a BTL mortgage. So if i buy a house with my girlfriend that will be my second home, but her only home.

            ...
            18-05-2019, 16:02 PM
          • Reply to Will I pay stamp duty?
            loanarranger
            There are a minority of lenders who will accept one person being on the Title but with two persons on the mortgage in order support the affordability , otherwise You cannot circumvent the SDLT premium in the second property is in joint names.
            18-05-2019, 21:34 PM
          • Tax implications of extending a lease at no cost
            LondonLiz
            Hi there

            i am one of four directors of a company that owns the freehold of the four flats in our house.

            one of the owners is selling and wants to extend the lease as its dropped to 67 years. I realise now we should have done 999 leases as soon as we bought the freehold but...
            14-05-2019, 10:12 AM
          • Reply to Tax implications of extending a lease at no cost
            LondonLiz
            Thanks - it would be our preference to renew them all at the same but unfortunately the seller is pushing us as their buyer is threatening to pull out.

            We now have differing advice over whether we will be liable to pay tax on the assumed financial benefit of the extended lease at no cost....
            17-05-2019, 16:27 PM
          • Capital gains tax and tax credits
            alice123
            hi i have recently sold a rental property and have been working out my tax liability for the GCT which works out at 2,500 tax to pay and im a non tax payer and this just takes me over the threshold - ok for tax credits pruposed do i need to declare the captial gain as its a capital gain and not income...
            17-05-2019, 14:29 PM
          • Reply to Capital gains tax and tax credits
            alice123
            update - ive been onto the tax credits for the past hour and they are saying not to inclue unless im re-investing or making money from the capital gains
            17-05-2019, 16:16 PM
          • Is this legal?
            js21983
            Hi all, I am completely new to this so wanted to get some informal advice. I currently jointly own a freehold property in London (with my sister that lives in the US) that I inherited from my mother many years ago. I do not live in the house, not does my sister; until now, the entire property was let...
            15-05-2019, 22:04 PM
          • Reply to Is this legal?
            buzzard1994
            It's permitted, but is obviously designed to evade tax. You need to declare the income you receive from your son - and pay tax on it. What is he going to pay over to you - the full rent or more than he has actually received? For £1500 this is a lot of complications and your son becomes a landlord with...
            17-05-2019, 09:56 AM
          • Reply to Is this legal?
            jpkeates
            Your son is basically renting the property from you, so he can deduct the rent he pays you from his income, so you don’t end up paying tax twice.
            17-05-2019, 07:21 AM
          • Reply to Tax implications of extending a lease at no cost
            Gordon999
            If the freehold title is owned by external party, then the external "freeholder" would charge each leaseholder for lease extension.

            If the freehold company is owned by the 4 leaseholders, the members of the freehold company can agree to extend all flats together to 999...
            17-05-2019, 05:49 AM
          Working...
          X