Rental Properties – what tax?

£20 note houseCan you claim all rental property expenditure against your income for tax purposes?

It depends on the type of expenses incurred.

Take Bill, a theoretical Landlord. Bill’s rental house needs to be fitted with a central heating system, where one did not exist before. At the same time, complete internal redecoration is required. 

The central heating system is an ‘improvement’, the redecoration is a ‘repair’ for tax purposes.

Separating the cost of the work, Bill can claim the cost of redecorating against rental income for ‘Income Tax’ purposes.  The cost of the central heating system is kept on file to note and can be taken into consideration on sale to reduce the Capital Gains Tax liability.

For more information and advice on letting or managing a property, please contact Sue Maaz FARLA in our Shipston-on-Stour office or Michael Scott FARLA in our Stratford-upon-Avon office.