Income from rent and loss Income from rent and loss
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  1. #1

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    Default Income from rent and loss

    I bought a flat in February as an investment. As a result I spent some money to make it and renovate it. However I couldnt rent it out before tax year's end. When I fill SA form I will only list the expenses.which will result in a loss.
    This year I will be in profit. Can I do something with the loss from last year?

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    Renovation will be carried over and taken off any capital gains when sold won't it? I don't think you can put improvement losses against operational profit/loss.

    Plenty of guides on t'interweb that explain it.

    Your accountant should also help you with this when they do you SA for you as well. Unless he's a proper tight fisted git.
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    You first need to work out what is revenue expenditure and what is capital expenditure.

    Any capital expenditure cannot be claimed directly against income, this would be for when the property is sold. (capital gains tax)

    The revenue expenditure if it creates a loss in the tax year can be rolled forward to future years and set off against future profits.

    Without seeing what you have actually spent and on what it would be best to speak to your accountant as they will have the full details and be best placed to advise you in my opinion.

    They also might want to do some tax planning to factor any rental profits with salary and dividends, In terms of the higher rate tax thresholds and taxes payable if breached.

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    Quote Originally Posted by Jeremiah@RHJAccountants View Post
    You first need to work out what is revenue expenditure and what is capital expenditure.

    Any capital expenditure cannot be claimed directly against income, this would be for when the property is sold. (capital gains tax)

    The revenue expenditure if it creates a loss in the tax year can be rolled forward to future years and set off against future profits.

    Without seeing what you have actually spent and on what it would be best to speak to your accountant as they will have the full details and be best placed to advise you in my opinion.

    They also might want to do some tax planning to factor any rental profits with salary and dividends, In terms of the higher rate tax thresholds and taxes payable if breached.
    Right, I see.
    So the renovation is capital expenditure.
    What are all the fees and charges paid to solicitors and various trademan to make the required pre rent checks - gas, electro, water, etc. Also to fix a few appliances?
    Also what is the expense for buying beds, sofas etc?
    So there will be some losses just not the amount I imagined for this year. How do I roll them forward to this years rent income? In the SA form?

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    Standard response is "What does your Accountant say"?

    Taking free advice from Gladiators and Radiator Bleeders is not the best way to manage your Rental Estate.
    I was an IPSE Consultative Council Member, until the BoD abolished it. I am not an IPSE Member, since they have no longer have any relevance to me, as an IT Contractor. Read my lips...I recommend QDOS for ALL your Insurance requirements (Contact me for a referral code).

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    Quote Originally Posted by pscont View Post
    Right, I see.
    So the renovation is capital expenditure.
    What are all the fees and charges paid to solicitors and various trademan to make the required pre rent checks - gas, electro, water, etc. Also to fix a few appliances?
    Also what is the expense for buying beds, sofas etc?
    So there will be some losses just not the amount I imagined for this year. How do I roll them forward to this years rent income? In the SA form?
    Maintenance is allowable against revenue. Putting anything in is capital. Fixing a broken door on a kitchen unit is OK. Replacing the kitchen cupboard or more is improvements so capital.

    Furniture is covered by an allowance for furnished properties.

    You've not really looked in to this very well have you. 10 seconds on google finds the answer to all these and I'll bet plenty you haven't thought about yet.

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    Quote Originally Posted by pscont View Post
    Right, I see.
    So the renovation is capital expenditure.
    What are all the fees and charges paid to solicitors and various trademan to make the required pre rent checks - gas, electro, water, etc. Also to fix a few appliances?
    Also what is the expense for buying beds, sofas etc?
    So there will be some losses just not the amount I imagined for this year. How do I roll them forward to this years rent income? In the SA form?
    I would advise you speak to your accountant as are they not preparing the self assessment tax return as part of there services and monthly fees if that is what you pay.

    Without seeing actual invoices and receipts I would not want to comment too much on the actual capital or revenue expenditure as us bean counters love to see a pile of receipts first

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    Quote Originally Posted by northernladuk View Post
    Replacing the kitchen cupboard or more is improvements so capital.
    It's not.

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    Quote Originally Posted by craigy1874 View Post
    It's not.
    Ok, far too simplistic an example to be either right or wrong so not the best sentence. When the change has been made also has an impact so poor example. I'll concede that one.
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