Carry Back Expenses - Rental Property

stefanboro

Hi Everyone,

As I recall a sole trader can claim expenses for any eligible amounts for up to seven years prior to the trade commencing.

I can see no reason why the same shouldn't apply to the rental of a property but I would be most appreciative if anyone can confirm this?

Thanks.

stefanboro

Oh, and I'm not thinking things like mortgage interest - just property maintenance and repairs.

Dean

Here you go.

If you incur expenses getting the property 'into' a "lettable" state then I believe these expenses are not allowable for income tax purposes.

Regards

Dean

PGM

I can see the logic with what you say. I rent out property, just trying to think of a cost that would relate to renting a property out, that would occur a few years before actually putting it available to rent?

Could I say I was decorating a house I'm currently living in, for the purpose of when it will be rented out?

T.C.

You need to be careful about what the house was used for prior to renting. You can't claim to decorate the property 7 years ago if you have been living in in ever since, for instance. The expenses must directly relate to the renting out of the property, not your own property maintenance.

stefanboro

Thanks guys - and to Dean in particular. I found that page just after I asked the question.

And yup TC & PGM - thinking along the exact same lines. I'm normally quite liberal with the definition of allowable but in this case am scratching my head a wee bit.

PGM

T.C. wrote: »

You need to be careful about what the house was used for prior to renting. You can't claim to decorate the property 7 years ago if you have been living in in ever since, for instance. The expenses must directly relate to the renting out of the property, not your own property maintenance.

Surely if you decorate/repair a few months before moving out, with the intention of preparing it from renting, these costs would be allowable. You'd just have to be careful of pushing it too far!

T.C.

Yes, quite right, just be careful not to push it. I think that if it were to be checked, you would have to prove intention to let at the decorating stage.

Newbie

may be of interest
http://www.hmrc.gov.uk/manuals/pimmanual/PIM2505.htm

Dean

PGM wrote: »

Surely if you decorate/repair a few months before moving out, with the intention of preparing it from renting, these costs would be allowable. You'd just have to be careful of pushing it too far!

This would be classed as 'getting the property into a lettable state' and wouldn't be allowable. Although, have your tenant move in and then carry out the work..!

Regards

Dean

ps. Newbie pay attention :001_tongue:

PGM

Dean wrote: »

This would be classed as 'getting the property into a lettable state' and wouldn't be allowable. Although, have your tenant move in and then carry out the work..!

Regards

Dean

ps. Newbie pay attention :001_tongue:

haha thank you Dean. I've been renting out my own property for years so should know this stuff.

What I have claimed for are repairs whilst a property has been empty, but the properties have always been available to let during the period.

From the link above;
"Thus, after the first property has been let, any later expenditure leading up to the letting of the second and later properties is part of the rental business and can be deducted - provided it meets the conditions outlined at PIM2000 onwards (it is incurred wholly and exclusively for the purpose of the business, it isn’t capital expenditure etc). "

Dean

PGM wrote: »

..but the properties have always been available to let during the period.

Yeah that's the key. I always look for some kind of 'advertisement'; be it, local, agency etc. This just helps prove to the Revenue the tax payers "intention".

Regards

Dean

Monsoon

PGM wrote: »

haha thank you Dean. I've been renting out my own property for years so should know this stuff.

What I have claimed for are repairs whilst a property has been empty, but the properties have always been available to let during the period.

From the link above;
"Thus, after the first property has been let, any later expenditure leading up to the letting of the second and later properties is part of the rental business and can be deducted - provided it meets the conditions outlined at PIM2000 onwards (it is incurred wholly and exclusively for the purpose of the business, it isn’t capital expenditure etc). "

Ooh, this has bearing on my question on rental expenses, I think. Thanks.