Capital allownaces on buy to let property

[Jim Beam]

I have a buy to let property which I have been doing up for most of the tax year 2013/14. I‘ve spent about £10k on a new kitchen, bathroom and converting the loft space. My accountant has just done my tax return, he says that the loss I’ve made on the property can’t be offset against my other income for the year; it can only be carried forward against future profit from the rental property. However, he also said that most of the expenditure on the property would actually be classed as capital and therefore there wasn’t actually a loss made in the year. Whilst I now understand this to be the case I‘ve done a bit of research and I think I should be able to claim capital allowances on the capital expenditure which apparently can be used to offset against other income. Am I right? Is there a definitive list anywhere of items that qualify fro Capital allowances?

 

[john1989]

Your accountant is correct.

 

[Jim Beam]

Your accountant is correct.

Thanks for your reply, I'm sure he probably is correct but what about the new bathroom for example. I understand that creating a new room in a house would be classed as capital but what about the actual fittings i.e. the bathroom suite?

 

[Philip Hoyle]

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323611/hs252.pdf

"You cannot claim capital allowance for plant and machinery (such as furniture and fixtures and equipment) for use in a dwelling house if you have a property rental business unless it qualifies as a furnished holiday lettings business."

 

[David Griffiths]

If the new kitchen and new bathroom are simply replacements for what was there before, then it is highly likely that they will qualify to be deducted as repairs (and therefore not as capital expenditure.) That assumes that the house was basically habitable when you purchased it.

That won't make any difference to the current year, which is showing a loss anyway, but they will be set off against future rental profits when they arise.

The conversion of the loft space is capital

 

[UK Contractor Accountant]

If you intend operating a propery rental business you can claim capital allowances on the assets used in your business e.g tools, ladders, van etc.

 

[Jim Beam]

Thanks for your replies.
I think I understand the difference between capital and profit and loss expenditure. But what I'm struggling to get me head round is, for example, the loft space is capital therefore surely there are capital allowances available for it? My accountant hasn't claimed any.
Also what about plumbing and rewiring costs? Capital or P&L?

 

[David Griffiths]

As Philip stated above, you can't get any relief for capital allowances on a dwelling house unless it qualifies as a furnished holiday let.

Even then you can't set losses against other income.

 

[Energise Accounting]

Read the link in Philips post it should make things clear. Your accountant is correct the income and expenditure has to be treated separately for your property