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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15758
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am a landlord with a decent size property portfolio, and

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I am a landlord with a decent size property portfolio, and have been acquiring properties since 1996. in the main I stopped acquiring properties in 2005 (other than some care homes acquired in 2008). all these properties are in my sole name.
since about 2005 onwards, a cycle of repairs started-ie all the properties were acquired from 1996 onwards in a fully refurbished and decorated condition. after a few years, say 5-7, these properties will need general redecoration. i was advised informally that these redecoration expenses should be capitalised, and no revenue deduction would be allowed.
so all income tax returns were prepared on that basis. now, on reflection, I consider this to be absolutely absurd. these expenses in my view are repairs to the properties caused to tenants wear and tear generally.
I have two questions:
1) for 2014/15 tax return, how should i deal with these back-dated repairs expenses? just claim them as normal repairs?
2) in relation to the care homes mentioned above-my lawyer did some work for the bank in relation to the loan facility and segregated his charge in the Completion statement. as this was done on purchase completion, I did not claim this as a tax deductible expense. I have now been told these expenses, and surveyors fees relating to valuations for the Bank (but not surveyors fees in relation to structural condition of the building) are in respect of the raising of finance and should be deductible when preparing my 2014/15 return.
do you have a view on the above questions?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

Leave this with me while I draft my answer.
Customer: replied 1 year ago.

ok-thanks

Expert:  TonyTax replied 1 year ago.
Hi again.

1 You are entitled to claim as expenses against income the costs of repair and redecoration of rental property. Many landlords do it after a tenant leaves and before a property is re-let. There are some forms of expenditure which should be capitalised and these are normally higher priced work which is intended to add value to the property.

You cannot simply treat the expenses you capitalised as if they were incurred in the 2014/15 tax year. Given that you have been completing annual tax returns for several years, you have probably missed out on claiming those repair and redecoration expenses I'm afraid. You have a year from 31 January following the end of the tax year for which to wish to make an amendment to your tax return to do so and if you miss that opportunity there is normally nothing you can do as the one year amendment period is there to cover such eventualities.

Normally, where a claim can be made through a self-assessment tax return it should be and the amendment time limit gives a taxpayer a second chance. However, as you did not make a claim for the capitalised expenses through your tax return there is no original claim to be amended so it is worth trying to make such a claim by letter. Read the notes here and here. I have to say, I'm not too hopeful. The time limits are here.

As you will read here and here, some pre-letting expenditure can be claimed as if that expenditure had been incurred on the first day of the letting of that property.

2 You can claim this type of expense against rental income as you can read here.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15758
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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