Can I deduct my time as an expense if I perform emergency repairs?

by Readers Question

6 months ago

Can I deduct my time as an expense if I perform emergency repairs?

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Can I deduct my time as an expense if I perform emergency repairs?

My tenants arrived back from hols to find water pouring in through a leaking roof vent down via a 9inch pipe connected to an en suite extractor fan.

I couldn’t get a local trades person to attend despite spending a full morning of calling. My tenants have and continue to be brilliant, but despite their understanding I felt obliged to fix the problem, not wanting it to get worse for them and me.

I was able to fix the vent, refit and insulate the extractor vent. The materials cost was approx £65, which I’m confident is an acceptable and permissible expense.

But what about my time and labour? It was a 40 mile round trip to do the first inspection, then a morning spent buying materials, a second 40 mile trip then a couple of hours performing the repairs.

If possible what would be a reasonable cost? Base it on getting a quote from a trades person?

Any help and advice gratefully received.

Thanks

James

Comments

Neil Patterson

6 months ago

I wish you could as I work full time, but unfortunately you can't claim time as an expense working for your own company. Your time is how you create profit.

However you can claim mileage or travel costs. Please see article "Claiming car costs against your property business" >> https://www.property118.com/claiming-car-costs-against-your-property-business/

"Can Landlords Claim Car Leasing Costs?" >> https://www.property118.com/can-landlords-claim-car-leasing-costs/

St. Jims

6 months ago

I'm asking rather than telling: couldn't the OP set up a LTD company that handles the management of his property and recharge himself 8-12% of the rent as a fee? wouldn't that help a bit in terms of reclaiming his time...or should I stick to the non-financial stuff? 🙂

I've read about other people utilising this caper but I struggle to understand it in full. I'd be much obliged if anyone on here could explain it with a hypothetical example of how it works & saves money.

Neil Patterson

6 months ago

Yes you can set up a management company as long as it charges a market reasonable rate so that you are not hiding profit.

This may be worth the time and expense for a larger portfolio and or if you are also going to take on other peoples properties, but it is not a cheap and easy option.

This is still not paying for your time though as it is just another company you own that pays tax on profit although it can pay a salary.

GabS

6 months ago

Reply to the comment left by Neil Patterson at 08/11/2017 - 10:35
Could this not be a useful mechanism for some landlords to deal with Section 24 though? I.e. if a landlord is self-managing his/her properties, setting up a management company and paying it a market rate (say 10% of rent, which is agent standard) could mean the difference between the landlord being forced into a high tax bracket or remaining in the basic tax bracket for personal tax purposes. The company is taxed at 19% corporate rate and if it doesn't pay a salary to the landlord, no further personal income arises for him/her. I realise this is tax deferral more than anything else, but if one doesn't need all the income and is happy to defer some until such time that his/her personal tax situation is more favourable, this would work, wouldn't it?

Neil Patterson

6 months ago

All circumstance are different and it depends on too many factors to be a general rule.

Winsome P

6 months ago

I heard of a woman putting in a clause allowing her to charge her time repairing the house at £20/hour wouldn't that be reasonable. Its also agreed in the contract. One tradesman at £50 per call out and one landlord at a call out . . . thoughts

St. Jims

6 months ago

Reply to the comment left by Winsome P at 08/11/2017 - 13:23It might be reasonable but it is never going to be popular - and it would depend on the tenant trusting the landlord to bill honestly. Without that trust, billing for time sounds like a recipe for a falling-out.
I find that bad tenants and bad landlords tend to create each other, most frequently by being bloody-minded about small things. No insult intended - I can be as bloody-minded as anyone.

Seething Landlord

6 months ago

Reply to the comment left by Winsome P at 08/11/2017 - 13:23
Presumably £20 per hour was the amount to be charged to the tenant for repairing any damage he had caused. This is a different matter from whether time cost can be charged as an allowance against tax, to which the answer is "no". Any amount charged to the tenant would however be taxable income (I think).

Graham Bowcock

6 months ago

James
In simple terms you cannot claim your time against tax (assuming that is what you mean). You save the costs of the tradesman by doing the work yourself and so make more profit - that's presumably why you are in business. If you were to "pay" yourself, then somewhere along the line you would need to pay tax on your earnings, so you gain nothing.

There is a separate issue of charging tenants where the event is required due to their actions (e.g. lost fees). Some agents and landlords will be more pragmatic than others; good tenants are worth keeping and worth helping. This income is, of course, part of your income on which you will pay tax.

Setting up a limited company to "manage" your properties seems like a hassle unless you are of a suitable scale to warrant it. Tax still has to be paid; as someone else said you are really just deferring it.

Graham

James B

6 months ago

Reply to the comment left by Neil Patterson at 08/11/2017 - 09:33
Thanks Neil, very helpful.

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