This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Renting Property query

dotto
Posts: 49
Joined: Wed Aug 06, 2008 3:16 pm

Renting Property query

Postby dotto » Tue Apr 02, 2019 9:56 am

We started a tenancy in a house we own with no mortgage on 1st April 2019 which means the tenant will have been in the property for 4 days before the end of the tax year. I intended starting paying tax from year commencing 5 April 2019 but it occurred to me that we have spent quite a lot of money getting the house up to scratch eg new flooring (this is Polyfloor stuck down planks so does that count under capital gains or income), blinds throughout, landlord certificate, and other fixtures and fittings such as toilet roll holders etc etc. The invoices for these items are all dated before 5 April 2019 . My question is - would we be able to claim for these expenses in the tax year 2019-2020 if the invoices are dated before the start of said tax year. If the answer is no we can't claim would it be feasible to complete a self assessment tax form for the year commencing April 2018-2019 for just 4 days of renting, but with all the costs included so that we make a loss that presumably can be carried over to the year 2019-2020.

We have also had landscaping carried out around the house which I am assuming can be declared for capital gains tax should we decide to sell the house in the future. It would be helpful if someone is able to confirm that Polyflor stuck down planks count against income or CGT. It must be clear I am no accountant but am keen to get things right with HMRC.

Jholm
Posts: 103
Joined: Mon Mar 11, 2019 4:22 pm

Re: Renting Property query

Postby Jholm » Tue Apr 02, 2019 11:14 am

I would strongly suggest you appoint an accountant to go through the expenditure line by line and advise accordingly. Based on the information you have provided, it seems some would be capital, some revenue and some not allowable at all. Pre-letting expenditure is not always allowable so I would suggest you do not expect to get tax relief for everything that has been incurred.

dotto
Posts: 49
Joined: Wed Aug 06, 2008 3:16 pm

Re: Renting Property query

Postby dotto » Tue Apr 02, 2019 12:14 pm

thank you for your advice. This is actually my son's house and he has been living in it unfinished (self build) for the last two years. This is not part of any business but my son's circumstances have changed and he has decided to rent out the house on a private basis. He is a basic taxpayer on low pay. In order to be able to rent out the house it needed flooring and carpets and blinds. These have all been installed within the last two months as we agreed with the tenant to do this before he moved in. From this information are you able to say whether, if we do a tax return for 18/19 (just 4 days) we would be able to claim the flooring etc and then carry losses over to 2019/20. We couldn rent out the property without carrying out the required items and also no-one would want to move in with bare floors. The problem I suppose is that the tenancy started on 1 April. Any help/guidance would be appreciated.

Jholm
Posts: 103
Joined: Mon Mar 11, 2019 4:22 pm

Re: Renting Property query

Postby Jholm » Tue Apr 02, 2019 12:37 pm

I will give my opinion but am happy for others to suggest otherwise.

I would say that the flooring, carpets and blinds are all capital items. Unfortunately, the fact is was agreed to be done with the future tenant would not constitute it to be a revenue expense. Practical examples often state that expenditure incurred to get a property into a habitable state would be capital. Ultimately, the value of the property is increased, not just maintained as would be the case with general repairs/maintenance etc...

Regarding the 1/4 to 5/4, it is often the practice to treat the year 1/4 to 31/3 so I do not think it would be unreasonable for the first return to be 2019/20. In theory, tax returns are only required when the gross turnover in the year exceeds £10,000 or the net profit exceeds £2,500.

A property allowance of £1,000 is also available so if the 1/4 rent is £1,000 or less, there would be no tax to pay regardless, even if you went in line with the exact tax year. This is not in addition to other expenses however. You would claim the higher of expenses or the allowance.

I would be interested to hear other's stances on the matter.

dotto
Posts: 49
Joined: Wed Aug 06, 2008 3:16 pm

Re: Renting Property query

Postby dotto » Tue Apr 02, 2019 12:53 pm

Thank you - I would also like to hear other opinions on this. So at the moment it would seem from your advice that we would produce a tax return for 2019-20 but would not be able to claim for any of the work done prior to the start of the tenancy. However, you feel that the flooring, both that stuck down and carpets, blinds and incidental expenses eg toilet roll holders etc etc will be claimable against capital gains tax in the future. All that sounds right now that I consider it again but if anyone else has a different opinion it would be much appreciated.

Jholm
Posts: 103
Joined: Mon Mar 11, 2019 4:22 pm

Re: Renting Property query

Postby Jholm » Fri Apr 05, 2019 12:16 pm

....seemingly no contracting opinions as yet.....

bd6759
Posts: 3109
Joined: Sat Feb 01, 2014 3:26 pm

Re: Renting Property query

Postby bd6759 » Fri Apr 05, 2019 12:49 pm

There shouldn't be any contrary opinion. The expenditure is capital in nature.

I would correct dotto. He said
However, you feel that the flooring, both that stuck down and carpets, blinds and incidental expenses eg toilet roll holders etc etc will be claimable against capital gains tax in the future.
I don't think you said that. Just because the expenditure is capital in nature does not mean it is an allowable expense for CGT purposes.

Jholm
Posts: 103
Joined: Mon Mar 11, 2019 4:22 pm

Re: Renting Property query

Postby Jholm » Fri Apr 05, 2019 3:32 pm

Thank you bd6759. I am only recently part-qualified so nice to hear you are in agreement.


Return to “Income Tax”