Repairs costs prior to tenancy starting

[theartfullodger]

Hi guys,,,

I'm trying to sort out wife & sis-in-law's tax property tax numbers for HMRC .. they inherited mum-i-L house before 5/4/2009 & finally got tenant in October 2009 (so far so good with tenancy..). The house is unfurnished so no 10% wear 'n tear...

I stressed several several several times they must keep all receipts, records etc.,. and am now going through pile of paper...

I've genuine expenditure receipts from eb BnQ in April, May, June (the house was OK but in need of many minor repairs, re-decoration, replacement carpets etc...)

Could some kind soul kindly point me at a simple set of guidelines as to what may or may not be charged to HMRC??
In particular does it matter when the expenditure occurred in the tax year??
I've read sa105-notes which says


"Property expenses
If your total property income in the year, including furnished holiday lettings
income, before expenses is less than £68,000, you do not have to list
expenses separately. Instead, put total expenses (minus any furnished holiday
lettings expenses) in box 27.
Generally, you can claim the running costs of your business as a deduction
but you cannot claim as property expenses any capital costs. These are
expenses relating to the purchase or sale of, or improvements, additions and
alterations to, land, property, equipment, furnishings or furniture. But you
may be able to claim a renewals deduction – see the notes for box 23.

&&&&&&&

Box 23 Property repairs, maintenance and renewals
Repairs
Include in box 23 expenses that prevent the property from deteriorating
such as:
• exterior and interior painting
• damp treatment
• stone cleaning
• roof repairs
• furniture repairs
• repairs to any kind of machinery supplied with the property.
Renewals
If you are not claiming capital allowances or the wear and tear allowance,
you can claim the costs of replacing furniture, furnishings and machinery
supplied with your property. You can also include the costs of renewing
small items such as cutlery, but if you do, you cannot claim the original
costs. If you received any money for the items being replaced you should
take that amount off the replacement costs. Do not claim for any element of
improvement compared with the original item.


"


Regards & thanks in advance

Cheers!

Lodger

[Telometer]

Many of these costs are quite probably capital, so deductible against the capital gain when the property is sold, rather than against property income.

You could either buy a cheap and grotty property and do it up before renting; or buy an expensive and ready-to-rent property. The costs will be similar(ish), the tax treatment should therefore be identical.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM35455.htm

Remember, whilst upgrades through technology improvement are prima facie repairs, when a building has been newly acquired they become capital. See point 1 at the bottom of this page.

http://www.hmrc.gov.uk/manuals/bimmanual/bim35460.htm

http://www.hmrc.gov.uk/manuals/bimmanual/bim35450.htm makes the point very strongly that
You should treat repairs expenditure following a change in the persons carrying on a trade, where the change is treated as a cessation/commencement, as revenue expenditure if the asset was in an adequate state of repair at the time of change. If abnormally heavy repairs expenditure is incurred on an asset shortly after the change of ownership the likelihood that it is capital is increased. But expenditure recurring at intervals of a few years (for example exterior painting of a building which has been deferred by the previous owner but which in the normal course of events falls to be expended shortly after the building is acquired) should be allowed.


And no, it doesn't matter when in the tax year the expenditure was incurred.

[theartfullodger]

Thanks Telo, much obliged!