Dilapidation repair deductions?
Question from Helen updated on 17th August 2020:
Earlier this year I brought an older property which has some issues that were reflected in the price of the electrician, roofing and plumbing (hot water cylinder). With that in mind I did get some painting done in the interior to freshen up for new tenants. Would I be able to claim the painting as an expense for tax? I think the property did have existing items to be remedied. But the painting was the least of them and didn’t factor into my decision when purchasing and price paid.
Our expert Mark Withers responded:
Work done on a property post acquisition, but pre tenancy, are known as “dilapidation repairs”. They are not generally tax deductible as they do not relate to wear and tear caused by your tenants but instead are a feature of the state the house was in on acquisition and the capital sum paid for it. The cost of making good the dilapidation matters prior to tenanting the property should be capitalised and accounted for as part of the cost of the property.
Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.
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