After the decision has been made to sell a rental property, expenses incurred cannot be deducted from the rental income received after that date. Although there is no specific legal requirement for written confirmation of the date of the decision, it would be advisable to make a note.
With a portfolio of properties, expenses such as stationery, petrol, phone bill, etc. are allowable because, even after a particular property has been sold, a business will still be in place receiving income against which such costs may be deducted.
Repair costs incurred on a property that is in the process of being sold are not generally deductible against the letting income. They also cannot be utilised as capital expenditure against the sale proceeds as the cost of maintaining a capital asset is not deductible for capital gains tax purposes.
Most importantly, mortgage interest accruing after the last tenant has left and the decision has been made to sell is not tax deductible as the property no longer forms part of the letting business.
This is a sample tip taken from our 165 page guide:
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