collette Posted January 8, 2007 Report Share Posted January 8, 2007 Hello, I hope someone out there can help me as I am struggling with self-assessment! I let my mother's property in march 06, can I claim tax relief on replacing old carpets, decorating materials, replacing old furniture before letting? If so, when filling out her self-assessment form do I subtract the whole amount from income or a %? I think I understand that in subsequent years i can claim 10% for wear and tear. Can I also claim for estate agent fees and for running costs whilst the property was empty for several months i.e. service charges and electricity? Can I claim for a cooker and washer which were bought 2-4 years ago? She will have made a loss as only one month's rent was paid in 05/06, can I carry all the loss over to the next year? My mother is severely mentally impaired. The rent pays goes towards care fees. When the property is sold on her death will Capital Gains Tax be payable? The property was her home for many years and has been left to someone in her will. Many thanks. Link to comment Share on other sites More sharing options...
plym77 Posted January 9, 2007 Report Share Posted January 9, 2007 Hi Collette As far as the self assessment, you can either claim the 'replacements basis' or 10% wear and tear, but not a mixture of both and you cant chop and change. So for example, you could claim the replacement of a cooker, but not the original purchase, but if you choose that method you cannot claim wear and tear. Whilst the initial expenses are costly, ordinarily in the long run, the wear and tear method is more favourable. As far as other expenses, repairs, redecoration etc would ordinarily be allowable as normal expenditure. As for services, ie. gas, etc while the property was empty, these are only allowable if they are in the course of the letting business, so for example, you were paying them as you could not secure a tenant. However, if the costs were purely because the property was vacant (so for example, you were thinking of selling etc) then they would not ordinarily be allowable. Estate agents fees are not allowable, but letting and management fees are, including securing a tenant and ongoing management. As far as the property on death, there are several issues here and I would suggest that you seek the advice of a tax adviser as this is not something I can answer generally. If you mothers assets in total (including everything she owns) exceed £285k, then her Estate will be subject to Inheritance Tax, and then if the value of the property increases between probate and sale then this will be subject to CGT. Like I say, this is a complicated subject and would suggest that you consider the issue now as there could possibly be ways to improve the position with some proactive planning. This is not something I would suggest you tackle on your own. I would be happy to advise you on this subject should you require guidance - please do email me on sherena.glanton@horwath.co.uk for competative quote. I hope the above information helps clarify some of the issues for you. Kind regards Sherena Link to comment Share on other sites More sharing options...
collette Posted January 9, 2007 Author Report Share Posted January 9, 2007 Hi Collette As far as the self assessment, you can either claim the 'replacements basis' or 10% wear and tear, but not a mixture of both and you cant chop and change. So for example, you could claim the replacement of a cooker, but not the original purchase, but if you choose that method you cannot claim wear and tear. Whilst the initial expenses are costly, ordinarily in the long run, the wear and tear method is more favourable. As far as other expenses, repairs, redecoration etc would ordinarily be allowable as normal expenditure. As for services, ie. gas, etc while the property was empty, these are only allowable if they are in the course of the letting business, so for example, you were paying them as you could not secure a tenant. However, if the costs were purely because the property was vacant (so for example, you were thinking of selling etc) then they would not ordinarily be allowable. Estate agents fees are not allowable, but letting and management fees are, including securing a tenant and ongoing management. As far as the property on death, there are several issues here and I would suggest that you seek the advice of a tax adviser as this is not something I can answer generally. If you mothers assets in total (including everything she owns) exceed £285k, then her Estate will be subject to Inheritance Tax, and then if the value of the property increases between probate and sale then this will be subject to CGT. Like I say, this is a complicated subject and would suggest that you consider the issue now as there could possibly be ways to improve the position with some proactive planning. This is not something I would suggest you tackle on your own. I would be happy to advise you on this subject should you require guidance - please do email me on sherena.glanton@horwath.co.uk for competative quote. I hope the above information helps clarify some of the issues for you. Kind regards Sherena Thanks Sherena, Your reply was very helpful. Best wishes, Collette Link to comment Share on other sites More sharing options...
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