Replacing Boiler in our Rented Property

HelgaWard

Hi,
We own and rent out a house. We got the gas boiler serviced at the weekend, and the guy doing the service advised that some part is likely to fail soon, and probably wouldn't be worth replacing. (Boiler is about 18 years old) I was wondering if it possible to deduct the cost of a replacement boiler from tax due?
Thanks.

Gumbo

I think it's a capital expense so 12.5% of the cost over 8 years.
The service or repair of the existing boiler would be deductible though.

You can also avail of grants to upgrade the boiler as a landlord.

The_Conductor

kceire is correct.
One thing though- look at the SEIA website- there are grants towards replacing system controls- I think its currently 700 per unit (aka about half the average cost). No grants for boilers though. I'd be a happy bunny- if the damn plumber who was supposed to come and survey our place here this evening- had turned up.........

P. Breathnach

kceire wrote: »

I think it's a capital expense so 12.5% of the cost over 8 years....

I'm not sure that it should be regarded as a capital outlay, because
- (a) no depreciation was claimed on the original boiler (my assumption), and
- (b) there isn't a significant element of improvement.

I suggest that you make a claim by classifying the expenditure under "repairs & renewals". The worst that might happen is that Revenue will question or challenge the claim. If that happens, argue the case with them.

newacc2015

P. Breathnach wrote: »

I'm not sure that it should be regarded as a capital outlay, because
- (a) no depreciation was claimed on the original boiler (my assumption), and
- (b) there isn't a significant element of improvement.

I suggest that you make a claim by classifying the expenditure under "repairs & renewals". The worst that might happen is that Revenue will question or challenge the claim. If that happens, argue the case with them.

If you replace an old boiler with a highly efficient modern one. Thats a large improvement.

OP make sure to get a condensing boiler. As they are 20% more efficient than new ones. Although gas boilers are generally cheap for parts. I wonder is the service man just looking for a handy job

P. Breathnach

newacc2015 wrote: »

If you replace an old boiler with a highly efficient modern one. Thats a large improvement.

In a sense, yes. But it can be argued that, in the strange world of accountancy values, it's not significant: a boiler for a boiler.

OP make sure to get a condensing boiler. As they are 20% more efficient than new ones. Although gas boilers are generally cheap for parts. I wonder is the service man just looking for a handy job

I'd be of the opinion that an 18 year old boiler is probably at the end of its useful life.

murphaph

IMO you are perfectly safe putting a boiler for boiler replacement through under repairs and maintenance. I wouldn't hesitate to do this. Modern boilers are what they are-you can't buy a model equivalent to something installed 18 years ago.

I'd also agree that 18 years is a good run for the boiler and I wouldn't put any more money into repairs on it, though I'd probably wait for it to fail again before replacing with new, so long as it's safe.

antoinolachtnai

The problem is that you can't predict when that boiler will fail again. It could be on the coldest day of the year and then what do you do? I wouldn't wait for the boiler to actually cease functioning.

Generally when you replace the boiler some sort of plumbing work needs to be done, for example to seal the system, flush the pipes and replace any faulty or very old components. The full install realistically takes two days to do properly. You don't want to rush it.

Gumbo

The_Conductor wrote: »

kceire is correct.
One thing though- look at the SEIA website- there are grants towards replacing system controls- I think its currently 700 per unit (aka about half the average cost). No grants for boilers though. I'd be a happy bunny- if the damn plumber who was supposed to come and survey our place here this evening- had turned up.........

I think you are correct. I've been looking at a few websites and the guys offer boiler replacements for €1895 (Worchestor unit and 5 years parts and labour warranty). They then go on to say that if you upgrade the controls at the same time it's an extra €700 which is fully refundable through the grant scheme.

P. Breathnach wrote: »

I'm not sure that it should be regarded as a capital outlay, because
- (a) no depreciation was claimed on the original boiler (my assumption), and
- (b) there isn't a significant element of improvement.

I suggest that you make a claim by classifying the expenditure under "repairs & renewals". The worst that might happen is that Revenue will question or challenge the claim. If that happens, argue the case with them.

murphaph wrote: »

IMO you are perfectly safe putting a boiler for boiler replacement through under repairs and maintenance. I wouldn't hesitate to do this. Modern boilers are what they are-you can't buy a model equivalent to something installed 18 years ago.

I'd also agree that 18 years is a good run for the boiler and I wouldn't put any more money into repairs on it, though I'd probably wait for it to fail again before replacing with new, so long as it's safe.

Cheers lads, I didn't mean to that my post was the rule and the be all and end all. OP, the lads put up a pretty strong argument as to what it can be claimed as an expense.

HelgaWard

Thanks everyone for your replies. I'm hoping that the latest service will keep the boiler going until the market picks up a little bit more and I can sell the house!

Marcusm

P. Breathnach wrote: »

I'm not sure that it should be regarded as a capital outlay, because
- (a) no depreciation was claimed on the original boiler (my assumption), and
- (b) there isn't a significant element of improvement.

I suggest that you make a claim by classifying the expenditure under "repairs & renewals". The worst that might happen is that Revenue will question or challenge the claim. If that happens, argue the case with them.

newacc2015 wrote: »

If you replace an old boiler with a highly efficient modern one. Thats a large improvement.

OP make sure to get a condensing boiler. As they are 20% more efficient than new ones. Although gas boilers are generally cheap for parts. I wonder is the service man just looking for a handy job

P. Breathnach wrote: »

In a sense, yes. But it can be argued that, in the strange world of accountancy values, it's not significant: a boiler for a boiler.

I'd be of the opinion that an 18 year old boiler is probably at the end of its useful life.

murphaph wrote: »

IMO you are perfectly safe putting a boiler for boiler replacement through under repairs and maintenance. I wouldn't hesitate to do this. Modern boilers are what they are-you can't buy a model equivalent to something installed 18 years ago.

I'd also agree that 18 years is a good run for the boiler and I wouldn't put any more money into repairs on it, though I'd probably wait for it to fail again before replacing with new, so long as it's safe.

A new boiler is a new boiler not a repair to or a renewal of the existing boiler. What you are suggesting is wholly inappropriate.

The_Conductor

Marcusm wrote: »

A new boiler is a new boiler not a repair to or a renewal of the existing boiler. What you are suggesting is wholly inappropriate.

Correct.
OP- your best bit is to get the SEAI grant for the boiler controls- you'll have a better system- and a lumpsum grant of up to 700 Euro- however, you'll have to take a hit with the sunk cost of the new boiler yourself.

Marcusm

Marcusm wrote: »

A new boiler is a new boiler not a repair to or a renewal of the existing boiler. What you are suggesting is wholly inappropriate.

What happens if the plumber was to buy the boiler and just invoices you for the job overall labour and boiler as one figure whatever and not itemised.

Then wouldn't you just have a bill from the plumber which could be fully written off?

murphaph

Marcusm wrote: »

A new boiler is a new boiler not a repair to or a renewal of the existing boiler. What you are suggesting is wholly inappropriate.

No it isn't. A new boiler is a renewal of the existing boiler. Revenue, thank God, are able to apply some common sense to such things-they know you simply cannot buy a boiler like the 18 year old life expired model.

If you replace a broken boiler with a modern equivalent you will have no trouble from Revenue and rightly so. You have little choice but to install a "better" boiler when the failed unit was 18 years old. So long as the replacement is the modern equivalent of the one that failed, it's a repair.

The very same discussions can be found on UK forums as the rules are more or less the same and in the UK HMRC have the classic "Double glazing example":

"What we regard as a repair will necessarily change with the passage of time to reflect technological improvements. This issue was considered in the tax case Conn v Robins Brothers Ltd [1966] 43TC266. As a result we accept that the replacement of a part of the ‘entirety’ with the nearest modern equivalent is allowable as a repair for tax purposes and not disallowable as improvement expenditure.

An example is double-glazing. In the past we took the view that replacing single-glazed windows with double-glazed windows was an improvement and therefore capital expenditure. But times have changed. Building standards have improved and the types of replacement windows available from retailers have changed. We now accept that replacing single-glazed windows by double-glazed equivalents counts as allowable expenditure on repairs.

Generally, if the replacement of a part of the ‘entirety’ is like-for-like or the nearest modern equivalent, we accept the expenditure is allowable revenue expenditure."

Revenue will be just as pragmatic as HMRC here.

HMRC Guidelines

paul71

Jon Late Floor wrote: »

What happens if the plumber was to buy the boiler and just invoices you for the job overall labour and boiler as one figure whatever and not itemised.

Then wouldn't you just have a bill from the plumber which could be fully written off?

What happens, you will get an inspection due to the unusual size of repairs claimed, then since I have never in 25 years met a stupid inspector he/she will spot the invoice, pull it and inspect the boiler see it is new and raise an assesent for the full amount of tax plus 100% penalty and interest since the original due date of the assesment. The taxpayer will then be under observation by the revenue for years to come.

murphaph

paul71 wrote: »

What happens, you will get an inspection due to the unusual size of repairs claimed, then since I have never in 25 years met a stupid inspector he/she will spot the invoice, pull it and inspect the boiler see it is new and raise an assesent for the full amount of tax plus 100% penalty and interest since the original due date of the assesment. The taxpayer will then be under observation by the revenue for years to come.

No you won't. A basic boiler might cost a couple of grand fitted. That is peanuts and remember, you don't actually state in the tax return what repairs were carried out. You could have a case of dry rot or a break in with damage done or who knows what.

Common bloody sense says replacing a basic but old broken boiler with a basic but new working boiler is a repair of part of the heating system. If the circulating pump went and you bought a new one you'd never for a second dream of considering it anything other than a repair. The boiler is just a larger, more expensive part of the whole heating system. If you replaced the boiler and completely re-plumbed the property at the same time, that would be capital expenditure.

handlemaster

How much are boilers now supplied and fitted ?

The_Conductor

handlemaster wrote: »

How much are boilers now supplied and fitted ?

Basic install- no controls etc- between 2k and 2.5k
No SEAI grant for simple boiler supplied and fitted- if you do controls at the same time- you get a grant of up to 750 Euro (controls and their install- normally is 1,200- 1,500).

Thats for a basic enough boiler (say a 25kw Baxi or Vokera)- and an understanding that you can hook into the existing pipework.

It would also include a chemical flush, timer/thermometer etc.

Budget 2,500 for a boiler replacement- for a basic entry level replacement. If you want all the bells and whistles- you're possibly up to 5k give or take.

Gumbo

handlemaster wrote: »

How much are boilers now supplied and fitted ?

In Dublin its competitive enough, a brand new Worchestor Boiler with 5 years labour and parts warranty can be supplied and fitted for €1895 assuming a relatively clean swap and that includes a system flush also.

For €700 extra you get the 3 zone control, downstairs, upstairs and hot water which is fully recovered by the SEAI grant.

The_Conductor

kceire wrote: »

In Dublin its competitive enough, a brand new Worchestor Boiler with 5 years labour and parts warranty can be supplied and fitted for €1895 assuming a relatively clean swap and that includes a system flush also.

For €700 extra you get the 3 zone control, downstairs, upstairs and hot water which is fully recovered by the SEAI grant.

One point I'd make- is prices are seasonal- aka you'll get a far better deal in the Spring/Summer months- when a lot of installers are twiddling their thumbs- than you will at this time of the year. One installer I was talking to during the week- cheerfully told me labour doubles for Sept/Oct trebles for Nov/Dec/Jan/Feb- and then falls back to double for March- and regular rates Apr/May/June/July (good luck finding anyone in August)........

Aka- if you wait until a boiler fails- which will inevitably be when you actually *need* it to be working- you're going to get stung. Planning ahead- and getting it replaced in the Spring/Summer- when rates are low- would seem to be the way to go.

Also- the prices you're quoting there- seem a little improbably good. I've been pricing boilers/installations in Dublin and Galway for the last 2 weeks- the only people quoting prices like you're suggesting- were either unregistered- or doing it under the table (and there were a not insignificant cohort of folk in these two brackets). The most honest installers- were those who were doing the controls- they have to be SEAI registered and have C2 certs- in order for an end user to qualify for the grant (650 for the controls, 100 for the boiler- if both being done at the same time. No grant for a boiler on its own. 650 for a set of controls being retrospectively installed.)

The SEAI themselves- reckon the 750 grant is sufficient to cover 30% of the typical installation costs of a control system- this is not accurate- its more like 60%- but its nowhere near the 100% you're suggesting.........

Gumbo

The_Conductor wrote: »

Also- the prices you're quoting there- seem a little improbably good. I've been pricing boilers/installations in Dublin and Galway for the last 2 weeks- the only people quoting prices like you're suggesting- were either unregistered- or doing it under the table (and there were a not insignificant cohort of folk in these two brackets). The most honest installers- were those who were doing the controls- they have to be SEAI registered and have C2 certs- in order for an end user to qualify for the grant (650 for the controls, 100 for the boiler- if both being done at the same time. No grant for a boiler on its own. 650 for a set of controls being retrospectively installed.)

The SEAI themselves- reckon the 750 grant is sufficient to cover 30% of the typical installation costs of a control system- this is not accurate- its more like 60%- but its nowhere near the 100% you're suggesting.........

The prices are from a registered, SEAI approved contractor. In fact it was then that recommended the grant to get the controls as the extra €700 would be claimed back by the grant.

I'll route out their details now.

Edit : here's one company doing an all in price of €1600 after the grant.

http://www.gasboilers.ie/Ideal-Logic.html

paul71

murphaph wrote: »

No you won't. A basic boiler might cost a couple of grand fitted. That is peanuts and remember, you don't actually state in the tax return what repairs were carried out. You could have a case of dry rot or a break in with damage done or who knows what.

Common bloody sense says replacing a basic but old broken boiler with a basic but new working boiler is a repair of part of the heating system. If the circulating pump went and you bought a new one you'd never for a second dream of considering it anything other than a repair. The boiler is just a larger, more expensive part of the whole heating system. If you replaced the boiler and completely re-plumbed the property at the same time, that would be capital expenditure.

Incorrect in all aspects, a new boiler is a new boiler and the tax treatment of that is laid out in legislation and in statements of standard accountiing practice that have been followed for over 100 years. Idle amatuer internet speculation is dangerous and expensive, op go seek profesional advice and do not be advised by the uninformed drivel spouted in this tread, asking tradesmen to falsify invoices and declaring additions as repairs has serious financial consequences and will attract revenue attention.

P. Breathnach

paul71 wrote: »

Incorrect in all aspects, a new boiler is a new boiler and the tax treatment of that is laid out in legislation and in statements of standard accountiing practice that have been followed for over 100 years.

Where?

Idle amatuer internet speculation is dangerous and expensive, op go seek profesional advice and do not be advised by the uninformed drivel spouted in this tread, asking tradesmen to falsify invoices and declaring additions as repairs has serious financial consequences and will attract revenue attention.

The poster to whom you are responding gave a citation in support of the position he was taking. All you have done is disagree in the sort of spluttering rhetoric that is the stock in trade of a lawyer without much of a case.

A replacement boiler is not an addition: it is a renewal. And the fact that today's boilers are somewhat better than those of about 20 years ago is not material in the larger scheme of things.

The Revenue Commissioners are not likely to get their knickers in a twist over a single-property landlord making a claim for a couple of thousand under "Repairs & Renewals". They might ask for clarification; so what?

murphaph

paul71 wrote: »

Incorrect in all aspects, a new boiler is a new boiler and the tax treatment of that is laid out in legislation and in statements of standard accountiing practice that have been followed for over 100 years. Idle amatuer internet speculation is dangerous and expensive, op go seek profesional advice and do not be advised by the uninformed drivel spouted in this tread, asking tradesmen to falsify invoices and declaring additions as repairs has serious financial consequences and will attract revenue attention.

I never suggested nor condone the falsification of anything. There is simply no need to falsify anything anyway as Revenue will treat a like for like (as near as possible given times change) replacement as a repair and not an improvement. It's not only fair, it's common sense. Running off getting "professional advice" (often from people who are professionals in name only) without researching things yourself is a sure fire way to burn through your money.

Case in point for me this week: Heating installer in our new house maintained we need an 11kW heat pump, despite our heat demand being projected at 7kW. He'd made a FALSE assumption that we'd use a night rate meter and this changes the calculation. I took the time to find the formula used and double check this "professional's" work and will save a small fortune by installing the more than adequate 9kW unit. Professionals can be really overrated sometimes.

JustAThought

Can't you now get the vat back on maintenance / home improvement jobs that are quoted on the revenue website before the work starts - the contractwr has to be registered & has to input the quote to the revenuepage/calculator & give you the reference number before the work starts for you to get the credit. But - you can accumulate work over a period of 4 years & using different ( registered) contractors up to 4 or 5k over this time - so if you have a few dufferent jobs tgis might be wirth your while.

My elderly aunt (90) recently got her wirking gas boiler replaced by one that cost 6k. I am sick reading this I'd no idea they were so inexpensive

ps buy a 10 blower heater from the euro shop & waIt until it goes... 18 yeara is a long innings, they don't make them like they used to & maybe yerman just wants his job rate & sellers comission before Christmas to top up his paycheque...

Gumbo

JustAThought wrote: »

Can't you now get the vat back on maintenance / home improvement jobs that are quoted on the revenue website before the work starts - the contractwr has to be registered & has to input the quote to the revenuepage/calculator & give you the reference number before the work starts for you to get the credit. But - you can accumulate work over a period of 4 years & using different ( registered) contractors up to 4 or 5k over this time - so if you have a few dufferent jobs tgis might be wirth your while.

My elderly aunt (90) recently got her wirking gas boiler replaced by one that cost 6k. I am sick reading this I'd no idea they were so inexpensive

ps buy a 10 blower heater from the euro shop & waIt until it goes... 18 yeara is a long innings, they don't make them like they used to & maybe yerman just wants his job rate & sellers comission before Christmas to top up his paycheque...

You thinking of the HRI Scheme IIRC.