If you’ve incurred qualifying expenditure at some time prior the letting of your rental property, you can still offset this expenditure against rental income (once it’s received) as long as it meets certain criteria.
You cannot claim for expenses, such as repairs or council tax bills, which you paid while the property was your private residence, as this expenditure is not for the purpose of the rental business. There are also restrictions on expenditure incurred when a full market value rent is not charged.
In order to qualify, pre-letting expenditure must meet the following:
- It must be incurred wholly and exclusively for the purposes of the rental business
- It has to have been incurred no more than seven years prior to the commencement of the rental business
- It cannot otherwise be allowable as a deduction for tax purposes
- If incurred after the rental income commenced, the expense would have been allowable, and
- It cannot be capital expenditure.
The expenditure, if allowable, will be treated as incurred on the day in which the rental business commenced.
For queries relating to this or any other Landlord tax matters, please contact Green & Co.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.