Capital v revenue expenditure on the first Refurb

Capital v revenue expenditure on the first Refurb

11:19 AM, 25th August 2014, About 10 years ago 16

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I’m just about to complete on my first BTL and need to give the house a “face lift” before I rent it out, mainly fresh coat of paint, new carpets, some laminate flooring and repair a bathroom ceiling (light skimming). Capital v revenue expenditure on the first Refurb

Is it all revenue expenditure?

According to HMRC website a repair of an asset can be written against the profits for that year.

What is considered a “repair” when it comes to BTL residential properties?

Thanks

Iwoma


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Comments

Michael Barnes

16:24 PM, 31st August 2014, About 10 years ago

Reply to the comment left by "Jane Reckless" at "30/08/2014 - 23:34":

I know, but those are the rules according to HMRC; I have exchanged several emails on this with them.

There is an article somewhere on P118 regarding this change

Jireh Homes

21:21 PM, 2nd September 2014, About 10 years ago

Whilst not an expert on the topic, my understanding is the likes of carpets and white goods are an allowable revenue expense in setting up a BTL. And upgrading the bath is not capital as one existed already, although installing one where one did not exist prior may be.

Paul Shears

22:19 PM, 2nd September 2014, About 10 years ago

Upgrading the bath is, I believe, not a capital expense. However there must be some like for like comparison. So replacing an old bath with a mass produced new one is fine but adding gold taps would not be. Replacing a bath with a Jacuzzi is, I believe, a capital expense.

Michael Barnes

9:25 AM, 3rd September 2014, About 10 years ago

Reply to the comment left by "Jireh Homes" at "02/09/2014 - 21:21":

A) Any upgrade has an element of capital expenditure; only replacing like for like is revenue.

B) The removal of the Renewals Allowance for unfurnished properties was reported and commented upon here http://www.property118.com/important-tax-news-for-landlords/36948/.

C) I would recommend that all landlords read the Property Income Manual (PIM) on the HMRC web site http://www.hmrc.gov.uk/Manuals/pimmanual/index.htm.

The removal of the Renewals Allowance was due to a House of Lords ruling and not a unilateral decision by HMRC: HMRC had been allowing something that was not stated in law as an allowance; House of Lords said that this was naughty and HMRC should stop doing it.

20:22 PM, 10th October 2014, About 10 years ago

Sorry to revive this old thread, but I wondered what the situation is with replacing like for like before a first let when this includes, say, a new kitchen. I am in the process of buying a flat which has been let out up to now and is habitable but "tired". So I am taking the opportunity to carry out repairs and renewals before re-letting. As the property has been habitable and lettable up until the purchase presumably the repairs will clearly be revenue expenses rather than capital?

Michael Barnes

21:15 PM, 11th October 2014, About 10 years ago

Reply to the comment left by "Liz Muck" at "10/10/2014 - 20:22":

It is my understanding that the answer is 'yes'.

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