First time BTL - Questions about tax deductible items

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    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

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