Can I claim back tax on renovations to inherited house

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  • jpkeates
    replied
    Repsted from a similar thread:http://www.landlordzone.co.uk/forums...ture-or-repair

    This is a wonderful grey area.

    If you make changes to a property that increase its value, you are improving it, which is a capital event and therefore the cost is allowable on disposal as a capital cost.

    However, some of the changes might simply be maintenance - changing a window that is in need of repair might add a much better window.
    This is inevitable as time moves on and things improve - the same cost window a decade ago would probably not have been double glazed or might have a wooden frame,
    now an "entry level" [!] window is probably UPVC and double glazed. This is a maintenance event and allowable against income.
    Fuseboxes are likely to be "replacement", but much improved
    Decorating with wallpaper replacing paint - it's an improvement and/or simply maintenance.

    You would need to consider a) which tax treatment might suit you most and b) evaluate each item to see how it should be treated (imagine having to explain why you chose the treatment to a nasty person from HMRC).
    The wording on estimates and invoices can be very influential (mostly they'll say things like replacing door, rather than upgrading door) and you might need to split invoices between categories (which is a bit of a pain).

    Some items are not allowable either way, and this is even more "grey".
    Furnishings are neither maintainable or capital - which means that laminate flooring is allowable as a "fitting", but carpet isn't.
    Again, what the invoice says will probably be key - "replacing kitchen" might be more helpful than "install fridge and dishwasher".
    If you securely bolt a normally free standing appliance to a wall, it might pass as a fitting.

    This is a matter of art not science and a good accountant can be worth their weight in tax allowance gold.

    You can claim for repairs and maintenance (and improvements) carried out before the property is rented.
    Just keep sensible records and only do work necessary to rent it - you're not creating your home.

    Leave a comment:


  • theartfullodger
    replied
    Maybe- some perhaps against incone tax.. others against CGT. There are at least 12 taxes a landlord may pay, don't just worry about income tax.

    But depending on repairs needed it may not be legalky OK to rent.

    And just issuing paperwork does not mean tenant accepts, agrees, leaves when asked or paperwork absolves you of responsibility. (E.g. "house taken understanding there is 2m x 3m hole in roof")

    Leave a comment:


  • MisterB
    replied
    a VERY grey area, though not impossible to understand once you've read the right books, tax café do a good series on property tax etc. there are tax allowances prior to trading, but you prob need to read the book AND engage an accountant to help you understand the issues

    if you do let for 6 months then make sure the tenant is aware of that, you could poss even get a tenant for less than 6 months if you decide to go down that path of a definitive short period. make sure you issue the relevant paperwork for getting the property back and don't forget issues re protecting any deposit.

    Leave a comment:


  • JK0
    replied
    This is a grey area as other posters have noted. Assuming you don't already have BTL's, my advice if it isn't uninhabitable, is to let it cheaply for 6 months, and then do the renovations next tax year. Then you will have established your rental business, and the renovations will definitely be deductible.

    Leave a comment:


  • mumto2
    started a topic Can I claim back tax on renovations to inherited house

    Can I claim back tax on renovations to inherited house

    Hi all.

    This is all new to me and I intend to get some books on becoming a landlord so I don't bombard this forum with lots of questions, but in the meantime I have a question....

    I have inherited my dads house and I intend to keep it as an investment for my family. Unfortunately my dad was not able to keep on top of the maintenance and the house needs a complete renovation in order to rent it out. My question is, when I do eventually get it rented out and come to submit my tax form this time next year can I claim for the renovations? I am assuming I can but at the same time I think, can you really claim for something like that???

    Thanks.

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