Property Repairs before the First Letting - What is allowable?

There seems to be something of a misconception (both amongst landlords and tax inspectors) about whether the cost of repairs to a newly-acquired buy to let property before it is first let is an allowable expense for tax purposes.

The question turns on whether the expenditure is ‘capital’ or ‘revenue’. Capital expenditure produces an ‘enduring asset’ for the property; revenue expenditure does not.

An example of capital expenditure would be adding a conservatory to the property, or installing central heating where there was none before. These are not allowable revenue expenses, whether they are incurred just after purchasing the property or at any other time.

Essentially, the rules for expenditure on a property before it is first let are the same as those for expenditure at any other time – if it is not capital expenditure, then it is an allowable expense.

Repainting, replacing a broken window, or having the carpets cleaned are all examples of revenue expenditure, and as such can be claimed as expenses even if they are incurred before the property is first let – or if, for example, you have decided to let a property that used to be your home.