Solicitors Fees

[thekingster]

Hi,

I brought a house back in March with a view to renting out 2 of the rooms and livong in one myself. I know I have a deduct a third of all the expenses to account for myself living there, my question is can I include my solicitors fee's for buying the place in the forthcoming years tax return? Could I include stamp duty as well? After all its an expense incurred in allowing me to rent it out....

Many thanks

Dave

[Tax Accountant]

Hi,

I brought a house back in March with a view to renting out 2 of the rooms and livong in one myself. I know I have a deduct a third of all the expenses to account for myself living there, my question is can I include my solicitors fee's for buying the place in the forthcoming years tax return? Could I include stamp duty as well? After all its an expense incurred in allowing me to rent it out....

Many thanks

Dave

The house was bought for you to live in in the first place. In any case, all the costs incurred in acquiring the property, including legal fees, stamp duty etc, is capital expenditure and is to be added to the purchase price of the property which can be used in the calculation of CGT if and when you sell the property. Therefore, the answer is that you cannot claim these expenses against your rental income.

have you looked into the 'rent a room relief'? Under this, you are allowed to claim £4,250 in place of any eligible expenses. But you cannot claim both. It is either the £4,250 or the actual expenses apportioned to the let rooms. If you claim the rent a room relief, you pay tax on all the rents in excess of the £4,250. If your rents is less than £4,250, rent a room relief is to be restricted to the amount of the rent.

Rent a room relief may also be advantageous when it comes to CGT because the letting under rent a room will not displace the PPR relief.

Ramnik