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bigduckontax, Accountant
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Hi I am currently trying to complete my tax return on rental

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Hi I am currently trying to complete my tax return on rental income I have received through the let property campagin and I can't seem to find out if rewiring the property before I let it out is an allowable expense. The fuse box needed changing and the electrian advised the house would need rewiring to get it to standard. As it is not a legal requirement to update the electric but it is up to the landlord to ensure the property is at a good standard I can't tell if it's a deductable expnse or an improvment?Thanks R Rutherford
Hello Mr Rurherford, I'm Keith and happy to help you with your question.
This is like the argument about how many saints can dance on the tip of a needle! Here is HMRC advice on the matter from Record Keeping and capital gains:
'Improvement costs
If you've spent money improving the value of your asset you may be able to deduct these costs. You can do so if the improvement is still reflected in the value of the asset when you dispose of it. For example, you install a swimming pool to add value to your property. It's still part of the property when you sell or dispose of it, so you can deduct the cost of the swimming pool. Maintenance costs, such as decorating, don't count.'
This, I submit, puts a re-wiring, clearly into the maintenance category.
However, in How to calculate capital gains and losses on property, HMRC advice is:
'improvement costs to increase the value of the property - but not normal maintenance costs such as repairs or decorating.'
However, in Renting out your property HMRC say:
'Allowable expenses don’t include ‘capital expenditure’ - like buying a property or renovating it beyond repairs to wear and tear.'
Now er all know that from time to time electrical systems do wear out and need replacement so I would submit that this further strengthens the case for the cost being tax deductible from rentals for Income Tax purposes as opposed to being an improvement adding to the acquisition price of the house for Capital Gains tax computations.
I do hope I have thrown some light into this rather murky area of property taxation.
Customer: replied 3 years ago.

Slightly clearer, but feel it is more a judgement call as oppose to a definate line on whether it is tax deductable. I would not have rewired the house and changed the fuse box if I was not going to rent it out so does this further strengthen the case for it being tax deductible or not? Many thanks

Yes, but I did enter a caveat in my initial remarks in reply to your question. As I said this could be argued one way or another until the cows come home. You could run it across your tax office for advice if you feel so inclined. I would suggest that you merely charge it as maintenance against rental income and if you make a loss in that tax year the loss can be carried forward to the next tax year. Such losses cannot be offset against income from employment.
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