Posted on 21st December 2016 at 15:37
Are you buying a property to let and carrying out repairs before taking on tenants?
This discussion relates to the repair and maintenance costs to a property rather than works creating a significant change to the condition of the asset. The cost of the works will be treated as capital.
It is known to believe that the costs of general repairs and maintenance such as redecorating starting after the purchase of a property is a revenue cost. Also work to repair or replace a deteriorated or broken asset generally is deductible as a revenue expense. HMRC will accept that repairs carried out just after a purchase isn't automatically a capital expense.
On the other hand, HMRC may then point out that if you buy a property in a good condition it's capital, then the total cost of buying a dilapidated property then repairing and redecorating it to a better standard must also be capital. This states that the cost of repairs made after buying the property which wasn't a high enough standard to let before making the repairs is a capital cost. This is especially backed up if the price paid for the property reflects the current state it's in.
Although this could be contrasted with the situation where the property is to a good standard when purchased yet the owner wants to make further amendments to boost it's appearance and standards. In this case it be argued that the expenditure is revenue in nature and therefore deductible.
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