Pre-Letting Expenses not allowable

machalla

I'm looking at my options for renting or selling my existing home.

I had made an assumption that any repairs or maintenance on a property prior to letting it would be allowable against any tax on the rental income. This is not the case as per the revenue guide.

What expenses are not allowed?

You can not deduct the following expenses when you are calculating your rental profit or loss:

Pre-letting expenses, other than property fees before you first rented out the property

So the cost of cleaning, repairing and decorating the property to put it into a good state for rental is not permissible against any taxable income.

I was thinking that you could agree a letting date with a tenant a week or two earlier than the date they take residence so any works could take place and be allowable against the rental income.

Any advice on this would be of interest.

Ms Doubtfire1

sounds pretty 'creative' to  me....you're leaving yourself open to all kind of blackmail if you have the wrong tenant..or if you and the tenant fall out over something.

machalla

That's what I wondered. Is it typically done or not.

The tenant should get a much improved property for no additional cost to them. If they were already willing to rent the property as is that is having seen it in a more basic state.

It just seems odd that pre-letting expenses shouldn't be allowed. If you don't let the place out you will never have a taxable income to put the expenses against so its obviously going against rental income.

The revenue presumably have some reason for it, its just not clear to me why.

silent_spark

If this is the first time you are renting, those expenses are not allowable before your first tenant. If you were to rent the property and then carry out repairs, decorating etc in between tenants, then those expenses are allowable. That is my understanding.

machalla

So the ideal scenario here is to rent a property in disrepair of some kind on a very short let (1-3 months say or less). Then do all repairs, decorating etc that might be required before a new tenant takes residence. That would then make these expenses allowable.

Michael D Not Higgins

Mod: Seeking illegal tax advice is against the rules.