Addition income and tax return

[Deleted User]

Hi,

I have a friend who is full time employed and he rents out a property which has just been refurbished. As the refurbishment is a luxury improvement, I take it that it can’t be tax deductible?

The income would just be added to employment income and subject to tax and NI?

T.C.

No, he has to fill in a Tax Return with supplementary pages on employment and income from property.
The refurbishment costs are capitalised and can be used against capital gains tax when the property is sold one day.
You should get an accountant to check things over! Send me a pm if you want further advice.

[Deleted User]

I'm AAT qualified and work in management accounts. Tax isn't my strong point.

From what I have gathered...

...refurbishments can only be claimed against income if they are needed and are similar to what as been replaced i.e. a bathroom suite costing £200 being replaced by a £1,000 one, you can only claim for £200. I know that double glazing can also be claimed for.

With regards to the 10% wear and tear allowance of net income, is that once you have deducted the expenses?

Bluewednesday

but as TC has said, those costs still need to be recorded as they will be used for the capital gains computation as cost of improvement.

The wear and tear allowance is rental income less water rates and council tax multiplied by 10% but only if the property is let fully furnished.

[Deleted User]

Can repairs before April 09 be offset against income for the 09/10 tax year if they were not claimed in the previous one (due to no tenant in the property at the time)?

Bluewednesday

Ideally they should have been claimed as a loss last year, are we talking a material amount here?

[Deleted User]

Haven't got all the details yet but we are talking carpets fitted and building work. Quite a bit was covered by the buildings insurance though.

deanshepherd

Don Juan wrote: »

From what I have gathered...

...refurbishments can only be claimed against income if they are needed and are similar to what as been replaced i.e. a bathroom suite costing £200 being replaced by a £1,000 one, you can only claim for £200.

That's news to me..

[Deleted User]

deanshepherd wrote: »

That's news to me..

Quoted in the BPP book for unit 18.

deanshepherd

Shame it isn't quoted in the legislation!

[Deleted User]

Pitty