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bigduckontax, Accountant
Category: Tax
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Property expenses

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I am looking to rent my father's property who has just moved into a nursing home, to try and raise income. It will be unfurnished so the wear & tear allowance does not apply.  Refurb work needs to take place on a tight budget, such as: replacing the old kitchen cupboards on a like-for-like basis and the appliances such as oven, hob and washing machine new carpets and blinds painting and decoration a new heating system replacement light fittings. Please could you let me know whether these are all allowable property expenses which can be claimed offset the tax payable? Also, if they are, my father would make a loss in the first year. Could this loss be carried forward to next year? Is any documentation necessary other than invoices and do HMRC ask for it? Thank you!

Hello, I'm Keith and happy to help you with your question.

It is not quite that simple, always bear in mind Benjamin Franklin's dictum that in life there are but two certainties, death and taxes.

The refurbishment costs together with the new central heating system are added to the original purchase price to inflate it for Capital Gains Tax (CGT) purposes thus reducing the gain on the ultimate sale of the property. So here there is an outlay which will not be recovered for many years. It is one of the perils of operating rented property.

New carpets, blinds, redecoration and the like are allowable against property rentals for Income Tax (IT). If a loss is made in any year it can be carried forward to future years or even carried back a year. The documentation you suggest would be adequate and might be needed in the event of some future enquiry by HMRC. These days there is no requirement to submit accounts on making an Income Tax return, but HMRC might check on the position later.

Have a look at PIM2020, HMRC's detailed advice on this matter. It is a bit of a wade through to while away the long, winter evenings!
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