1st let of inherited property

by **sherpa61** on Tue Jan 03, 2012 11:43 am

I inherited a property a while ago which has been empty whilst work has been completed before it could be let out. Now it is let, unfurnished, for the first time. We replaced things such as the stainless steel sink and taps, oven, hob, freezer flooring in the kitchen. Renewed the boiler, carpets and curtains. Renewed the rotten shed and redecorated throughout. Added more loft insulation. We carried out this work ourselves. Can I claim any of these expenses back against the first rental income? I am having trouble finding any precise info that says I can or I can't. Thanks very much.

by **King_Maker** on Tue Jan 03, 2012 5:25 pm

This is probably the most contentious area of property taxation - the need to distinguish between capital and revenue expenditure. Only the latter is allowable for Income Tax.

Have you read HMRC's Property Income Manual? Or other property investor books?

by **sherpa61** on Wed Jan 04, 2012 6:35 pm

Thanks for responding. I have read PIM2505 - Beginning & ending of a rental business. Would the below apply in my case? Are they referring to property repairs, maintenance and renewals? Quote -Expenses incurred before rental business begins - A taxpayer may incur expenses for the purposes of a rental business before that business starts. If so, they may be able to claim a deduction for them once the letting begins, (ICTA88/S401 or ITTOIA05/S57). Relief is only due under these special rules where the expenditure:
• is incurred within a period of seven years before the date the rental business is started, and
• would have been allowed as a deduction if it had been incurred after the rental business started.
Should I only claim for definite "revenue" items as redecoration, purchase of fire alarms, adding extra loft insulation. We also repaired the chimney stack which I would have thought would be an allowable expense.