Lee Sharpe looks at when tax relief is available for repairs to properties, and particularly when they are first acquired for letting out.
In this article, we shall look at a case study to illustrate the ‘capital versus revenue’ divide in the context of repairs to residential property. This is a common sticking point for landlords and their advisers.
Generally, securing relief for income tax is preferred, as it results in an immediate deduction against in-year profits, rather than having to wait until a capital disposal occurs. References are to HMRC’s Property Income manual (PIM) or Business Income manual (BIM), but will largely hold good whether for income tax or corporation tax.
- Significant repair expenditure on the acquisition of a new property does not mean that the expenditure must be capitalised: