Renovation of empty property to let

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    Renovation of empty property to let


    i was hoping someone could help. My partner and i have bought a property to let. It has been empty for almost 2 years (2 years come January 2020).

    it needs a lot of work doing to make it liveable particularly in respect of damp. Am i correct in saying if the work would be needed if already rented it would be an allowable expense?

    we are considering holding off major works until jan when we are entitled to pay 5% vat rather than 20% this would mean however that it is highly unlikely that we would have our tenant in in this financial year. Would this make a difference in terms of claiming for the allowable expense of could the loss be carried forward. I only ask as the cost for damp works is likely to exceed the first years rent.

    and finally i bought the house jointly but my partner is the only one who will recieve the rent. Is it just my partner who fills in the tax return or do we each have to do one and split 50/50


    If you are unmarried partners, you are able to organise your business as you wish.
    It would be sensible to document how you plan to arrange your affairs and both sign it.

    You might want to talk to an accountant to be sure, but I have a feeling that splitting the rent 99:1 might be more sensible than your partner being the sole landlord without having too much of a detrimental effect.
    As joint landlords if one of you dies or your relationship ends, you both have an interest in the tenancy and can serve notices for both of you, if your partner was the only landlord, your ability to do that is limited.

    You can claim for any expenses incurred in readying the property for letting for up to six years before the first day of the first tenancy, which is when these charges are deemed to have been incurred by the business.
    If the costs are capital (and the amount of improvement to overcome damp seems to be beyond simple maintenance, they are capital expenses and would be offset against any otherwise taxable gain when the property is sold.
    Again the six year limit applies.

    A lot of websites say that the allowance lasts for seven years - so either I'm wrong or they are referring to the costs being allowable incurred in a tax year, which then extends the time frame. But that's not the same as seven years in all cases, so perhaps it is me.

    From a practical point of view, HMRC may want to review any return where maintenance costs exceed the entire year's income - but they're massively overworked and may not.
    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).


      After the first tenant moves in, send a letter to the Tax Office to notify the rental profit will be shared 1: 99

      Dear Tax Inspecter,

      We , A and B are joint owners of a property at 88 , Garden Terrace , Timbuktoo. . We wish to inform you that we have commenced letting of the property on 1st Feb 2020 and have agreed the rental profit will be shared A = 1% and B= 99%.

      Yours sincerely,

      signed by A & B.


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