Normally when you have an expense such as decorating you can claim it / offset against rental income. All ok
There will come a time however when you have no more rental income and you will have redecoration costs etc to get the property ready for sale. This can run to several £1,000’s.
Lets say your costs for sorting out the garden and redecoration in a tax year exceed your rental income by £10,000. Is there any way to claim this back??
Now solicitors fees and estate agents feed can be set against capital gains tax of course, but not maintenance costs. Has anyone any ideas to lessen the pain??
Unless your rental business has ceased, you can carry forward losses against your income for up to 6 years. This is exactly what I did when I had tens of thousands of pounds worth of costs incurred (not capital costs) from renovations of properties I’d bought when we were starting out.
Those 6 years of expenses effectively wiped out our rental profits above our allowances and thereby meant we paid zero tax from rental income for ages.
The rental business has ceased to provide income, ie there is no more rental income. There are 5 empty houses being sold all attracting council tax and refurb costs and nothing to set those expenses against.
The RRA and the RROs etc were the final straw plus i anticipate a significant hike in CGT so its time. I dont believe there is a way to get any tax breaks, …but thats the idea of this forum to ask others for suggestions. Thankyou for your prompt reply though
@Candid1 you can only set rental allowances against rental income or carry it forward and set against future years’ rental income.
I guess you could rent a property to yourself and then you have income tax on the rental income and also maybe a benefit in kind from use of the property. You’d need a tax specialist to work out whether there was any benefit in doing that, I can’t see any reason to do that tho.
Refurb costs are an investment to get a higher sales price than you would get otherwise
Some utilities cos will stop charging if you tell them a property is unfurnished and unoccupied (eg thames water)
Council tax - make sure you claim the single 25% discount
Thankyou. Yes water utility does give you a break, good point. The 25% ctax reduction is only if you live in it for the councils around me though each council makes up their own rules so your area may be different.
Millibands proposed changes to epc calculations is also gathering pace from SAP to HEM , the legislation creation to adapt to is relentless
The only reason to spend the money you have in order to prepare for sale is to effectively recoup your expenses from increased sale price. If that isn’t possible then I’d question whether you should simply have left the buyer to pick up the cost and sold for a lower asking price.