Menu
Tax Deductible Repairs to Buy To Let Property
Tax Deductible Repairs to Buy To Let Property
Preamble
What-are, and What-are-not Tax-Deductible Repairs to Buy To Let Property is a Grey Area with a lot of Variables which can be open to Interpretation and, in the case of a Local Tax Inspector, possible Negotiation, when filing your Annual Tax Return, over whether a particular Job is a Repair or an Improvement as, Improvements are not Tax Deductible from the Rental Income.
I have been operating the Tax-Deductible Repairs to Buy To Let Property Policy, that I am outlining in this Blog, since 1996, during which time I know that many of my student’s Accountants have disagreed with me, but neither have any of my Investor Clients or I ever lost in our Negotiations with a Tax Inspector.
I must also add that I am not an Accountant and if you are going to base any Decision concerning any Aspect of the Content of this Blog, I advise you to take Professional Advice from a Qualified Accountant as I cannot take any responsibility for how and what you do as a result of reading this Blog.
Tax Rules are seldom absolute, particularly in a matter as complex as Buy To Let and this Blog includes my opinion about whether specific Work on a Property is a Tax-Deductible Repair or non-Tax-Deductible Improvement, and is the result of the years of experience, which others may disagree with, including your Local Tax Inspector, whose opinion can also differ from one to another Tax Inspector.
To reach a finite answer requires a Court Decision, but even that can change over time.
The reason why the question of whether a Job carried out on a BTL Property is so important is that a BTL Property can be Cash-flow Positive from the start of the 1st Tenancy, with substantial Tax Losses, resulting from splitting the Cost of Renovation between Tax Deductible Repairs that are paid out of the monthly Rental Income and Improvements which are paid out of the Sale Proceeds of the Individual Property concerned.
A further twist is that, for Tax Purposes, the Rental Income is a cumulative Portfolio Income when two or more Properties are involved.
This content is locked
Login To Unlock The Content!