capital or expense with property

Hello

I have a situation with a public limited company, set up to let properties. A house has been bought.
The owner has spent money on repairs and improvements. The builder's invoices detail the work done but not the amount paid for each task. So for example it lists "repair of guttering at back". There is also no breakdown of labour or materials. Most of the work appears to be repairs and maintenance. Is it reasonable to put down a percentage as repairs and maintenance and the rest as capital (fixed asset).

One item is to rip out old kitchen and to install new one (without materials). As this is an improvement would this labour count as capital? The material was bought separately. My manager has said I should record the materials as equipment expense as none of the items individually cost more than £1000. But the whole job including all labour and materials will result in a completely new kitchen in a rental property. Won't this all count as a capital expense?

Any help with this much appreciated

Thanks

David

Answers

  • paulawelshpaulawelsh AAT Student, AATQB Posts: 14
    Hi
    Yes I would think that all those would count as capital expense because it is to refurbish a house.
    You would put the kitchen itself as capital expense and the labour and materials separate
    Kind regards Paula Welsh
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