Let property again

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Poodle
Poodle Registered Posts: 711 Epic contributor 🐘
in General accounting discussion
Hi

If you purchase a buy to let and then do it up, incurring costs that would be treated as revenue once a tennant is in these costs must be capitalised if carried out prior to having a tennant.

However, how long do you suggest would be resonable to have a tennant in to charge replacements as revenue? Day 1?

Poodle

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  • Peter W
    Peter W Registered Posts: 22 New contributor 🐸
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    It isn't always the case that refurbishment expenses before a tenant moves in are treated as capital. Have a look about 1/3 of the way down this page:

    http://www.hmrc.gov.uk/manuals/pimmanual/PIM2020.htm
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
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    Can you be a bit more specific Peter?

    I can't see anything in that link that supports your view.

    The sentence I usually quote to clients is:

    'A property acquired.. ..that couldn’t continue to be let without repairs being made..'

    Costs remain capital until the property is in a good enough condition to be let. I also try to advise clients, where practical, to get the tenants to move in early and get the work done whilst they are there. The Revenue can't then argue that it was not already in a condition good enough to let.


    Oh, and in answer to Poodle.. Yes, Day 1.
  • Peter W
    Peter W Registered Posts: 22 New contributor 🐸
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    deanshepherd wrote: »
    The sentence I usually quote to clients is:

    'A property acquired.. ..that couldn’t continue to be let without repairs being made..'

    We don't know if this applies in this case.

    As for specifics, the link states that "The mere fact that the taxpayer bought the asset not long before the repairs are made does not in itself make the repair a capital expense." I think the OP needs to read the "Repairs etc after a property is acquired" section of the page, and then apply it to their particular situation.
  • Poodle
    Poodle Registered Posts: 711 Epic contributor 🐘
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    Hi

    This is in anticipation of actually incuring the cost. The Kitchen and bathroom are functional but need updating.

    Client could do the work now without a tennant and then have to capitalise th cost but he would prefer to have this cost as revenue. He has a tennant happy to move in and have the work completed whilst he is living there.

    There will be no change to rental once the work has been completed so I will advise to go ahead and start as soon as possible once the tennant is in.

    Thank you

    Poodle

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