First Time Landlord

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

    First Time Landlord

    Good afternoon all,

    I am just about to move into my partners house, with the intention of renting out my own house in April / May time. Whilst I have done my own research and read some of these forums, I just wondered if anyone could provide a bit of advice.

    I am just about to get my en suite remodelled, a long planned renovation, which based on my research could potentially be a CGT write off when i come to sell the house? Is this correct?

    My main question however relates to my 21 year old boiler. It is quite noisy but gets serviced every year and I am always told it is still ok. I was thinking it might be worth getting it replaced before i rent, as i know full well at that age it'll go at some point and i have read that some boilers don't meet new EPC requirements. From a tax efficiency point of view, if i waited until it went wrong would that then be classed as a "repair" and become Income Tax deductible? Would pre-emptively replacing the boiler be a bit wasteful, especially doing it in a tax year when my house is my primary residence?

    Any advice on this matter would be very much appreciated.

    Kind Regards

    Mike
    Last edited by Bristol_newbie; 08-02-2021, 13:21 PM. Reason: Boiler, Tax

    #2
    If you move into your partners house (and genuinely do that, not just say that it's happened), the property stops being your main residence.

    That has two effects.
    Your liability for CGT changes, because residential relief ends.
    You can make changes to the property to prepare it for business which qualify for tax relief because the expenses will be solely and exclusively for the business, because you get no other benefit from them.

    For tax purposes, the expenses are deemed to have happened on the first day of the first tenancy (when your business actually begins).

    Replacing the boiler would be an allowable expense (essentially the same as a repair) because it's classed as maintenance. You don't have to wait for it to break to make it allowable for tax purposes.

    The bathroom may be the same.
    If one bathroom is being replaced with what's essentially a newer version of what's there, it's maintenance.
    HMRC accept that a new bathroom will be better than an old one, without it being a capital improvement.
    If what's being done is materially better and improves the value of the property in a meaningful way - so you're replacing an avocado bath and toilet with a wet room and making the room bigger, some of the expense is maintenance and some would be capital.
    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


      #3
      Provided you have GSC then your 21 year old boiler might be more reliable than a new one, especially if it's a traditional system boiler with separate immersion so even if it breaks they can still have hot water.
      The next few years will likely see innovative new heating systems to cope with the imminent ban on new gas boilers.

      Comment


        #4
        jpkeates,

        thankyou for taking the time to provide such a comprehensive reply. That definitely clarifies my situation, very helpful.

        thanks.

        Comment


          #5
          Contact an accountant re your CGT The situation seems to have changed radically in April 2020 They can also advise on your other tax issues
          Worth the c £200 which can be set against income tax as an allowable expense.

          Comment

          Latest Activity

          Collapse

          • Switching mortgage to BTL and tax implications
            by dotcotton999
            Evening all,

            I am currently looking to move house and also have a rental property that has around £200k equity in it.

            The rental house had consent to let and on a repayment mortgage and has 3 years to go until I can switch deals.

            I have spoken to a mortgage broker...
            08-04-2021, 19:52 PM
          • Reply to Switching mortgage to BTL and tax implications
            by Gordon999
            D999,

            The taxman's method of calculating :

            Capital gain is the Sale Price ( say £200K ) minus Purchase Price ( say £130K ) = £70K capital gain.

            But buying and selling expenses are allowable and include the conveyancing cost : say £1K plus estate agent'...
            12-04-2021, 14:17 PM
          • Reply to CGT and tax returns
            by Lots on
            Thank you for your kind words JP and the tips re using an accountant. Having been taxed at source all my working life this is very useful information. I will look round for an accountant. A friend of mine who is also a landlord as well as having a day job has one, so maybe a personal recommendation...
            12-04-2021, 10:04 AM
          • CGT and tax returns
            by Lots on
            Hello all, just need some advice re CGT. I have a house which I refurbished entirely, mostly in this financial year and I could start my tax returns on the 6th of April 2021. I spent nearly £30000. New kitchen and bathroom, re doing the garden, new flooring throughout ,total electrical re wire, re...
            02-04-2021, 09:46 AM
          • Reply to CGT and tax returns
            by jpkeates
            Thank you for your work in the NHS!

            I've found that the first sessions were the most valuable in terms of what could be saved, and the value has diminished slightly and the costs of the returns being done has stayed the same/slightly increased, so it feels like it's less worth it.
            ...
            12-04-2021, 08:28 AM
          • spreadsheet
            by jase222
            I been looking at spreadsheets to list my expenses and every template I find seems to allocate expenses per house ie 5 houses = 5 separate sheets whereas I just put everything down on one sheet.
            I would like to know if I have been doing it wrong all these years.
            ​​​​​​Any help...
            11-04-2021, 13:53 PM
          • Reply to spreadsheet
            by jpkeates
            I use one page of a spreadsheet for all the income and expenses and have other pages which automatically summarise the data property by property.
            12-04-2021, 08:24 AM
          • Reply to Switching mortgage to BTL and tax implications
            by jpkeates
            When you sell the property, you can't retain any of the equity, so that doesn't really make any sense to me.
            On disposal, the mortgage will end and have to be repaid.

            The value of the rental property when first let is also a limit to the amount of the loan against which interest can...
            12-04-2021, 08:22 AM
          • Reply to Switching mortgage to BTL and tax implications
            by dotcotton999
            Gordon999 thanks for your reply. In regards to CGT so if I was due to sell a house I could request to remove all the equity before the sale and wouldn’t be subject to CGT... that doesn’t seem right.

            In regards to switching my mortgage from repayment to and interest only... would I incur...
            11-04-2021, 19:31 PM
          • Reply to spreadsheet
            by Gordon999
            Its good to keep a separate sheet for each property because when you come to sell one house , you may want to show the rental and expenses records for one house to prospective buyers.
            11-04-2021, 19:08 PM
          Working...
          X