Renovation to house I own (to be rented out) - tax relief

pj9999

I've just purchased a house which needs total renovation & extension.
Once completed I plan to rent it out.

Will any of the work I do on it help me in terms of tax credits?

Many thanks
P

dbran

Hi

Any expenses incurred prior to the date on which the premises was first let apart from auctioneer’s letting fees, advertising fees and legal expenses incurred on first lettings is not allowable as a deduction against the rental profits.

It may be allowable as part of the base cost for CGT purposes.

dbran

Mightymouse vs Dangermouse

Are Extensions
new roofs
new electrics
new plumbing
Groundsworks
(all trades to renovate a house, before renting it out)

Deductible from Rent recieved?
And if so, over how many years as renovations could cost 50k, and annual rent may be say 8 to 10 k?

Appreciate any help

Mightymouse vs Dangermouse

Hi again, just noticed wording of your reply now DBran. You mention First letting. After that are other costs, deductible from second letting onwards?

dbran

Nope

http://www.revenue.ie/en/tax/it/leaflets/it70.html#section7

Best Regards

dbran

barneystinson

Mightymouse vs Dangermouse wrote: »

Are Extensions
new roofs
new electrics
new plumbing
Groundsworks
(all trades to renovate a house, before renting it out)

Deductible from Rent recieved?
And if so, over how many years as renovations could cost 50k, and annual rent may be say 8 to 10 k?

Appreciate any help

In general no, particularly if they're all incurred on the extension.

The costs would be considered enhancement expenditure and allowed as a cost in reducing the capital gain on a future sale of the house.

If the costs qualify as repairs rather than enhancement then they would be an expense against the rents received.

dbran

After the first letting you may be able to obtain capital allowances if they are classed as fixtures and fittings at 12.5% PA.

The expenses you describe suggest to me that are not fixtures and fittings but are capital in nature and have to do with the "fabric" of the building ie they cannot be taken away or removed from the building and therefore would only be allowable as part of the base cost for capital gains tax when you sell the premises.

dbran

Mightymouse vs Dangermouse

ok. Its the terminology that i get cofused with. Say there as no extension.
and you fixed it up bit by bit, good enough to rent out say. And then 1/2 years later you replace doors/windows, put in a new bathroom/ kitchen, new flooring, reslate the roof. Could you deduct that from rent recieved?
reason i ask, is from what om reading here is that , if you repair/replace after youve started to rent out is ok bit prior to that(getting house in shape to rent out) is not deductible?

Mightymouse vs Dangermouse

ok. Being honest its the terminology that confuses me about all this stuff.
Say you get the house upto a good standard that you can rent it. Then you can deduct say, solicitors fees/insurance from rent recieved. i get that.
Say then, 1 or 2 yrs later, you decide to replace th ewindows and doors and put in a new bathroom, can you then deduct that from rent recieved?

dbran

Hi

If you are repairing something then it may be allowable as an expense against rental profits, if you are putting in something new or enhancing the building in some way then it would be capital.

So if you did the property up piecemeal as you suggest you may still have the same issue for some of the expenditure.

Regards

dbran

Mightymouse vs Dangermouse

ok, thats good to know. thank you

Mightymouse vs Dangermouse

theres hardly any point in being a landlord then ?