If you incur expenditure on a property that you let, then this is tax deductible. Generally, a repair is something that puts to right something that has been damaged or does not work correctly. A repair simply restored the situation to what it was before without the need to replace the item entirely.
If you make a change or alteration to a property, then that is a capital expense and is not deductible against the rents received. This expenditure is offset against the eventual sale proceeds and thus you must still keep a careful record of such expenditure. This will include improvements that are not incidental to the repair.
Where the repair does involve some alteration then the cost will still rank as a repair providing the alteration is incidental to the nature of the repair. HMRC now accept that an improvement using modern materials will rank as a repair, and the usual example used for this is the replacement of wooden windows by UPVC double glazing windows.
Where the change is clearly on of a capital nature you cannot claim for the notional amount of repairs that you might have incurred if you had not made the capital improvement.
In your records it is very important that you clearly identify what you consider to be a repair, and what is a capital improvement so that these can be dealt with correctly when your accountant prepares your accounts. If he does not produce any accounts for you – Oh dear!
If you need further advice on this, or any other item, please do not hesitate to contact us at DEB.
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