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Any expenses that can Be offset when preparing a rented house for sale?

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  • 07-05-2019 7:34pm
    #1
    Cat_M
    Registered Users Posts: 119 ✭✭


    Sorry if this is a stupid question.

    I'm waiting to reclaim my house from tenants to prepare it for sale. In the event that I'm likely to have more expenses than if I was living in it myself all along, is there anything I might be able to claim back for this tax year as it will have been rented for the first half of the year. The garden has been left go to hell etc and it will be very grubby. I will need to dispose of furniture etc that's been spoiled rather than just taking my own stuff to my new house and probably have some repairs.

    Thanks.


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    #2
    DubCount
    Registered Users Posts: 1,089 ✭✭✭DubCount


    This is a more complex question than it seems.

    If the costs incurred are connected with the business of renting out the property, they go towards the profit/loss for the year for income tax purposes.

    If the costs are in connection to getting the property ready for sale, they are part of the selling costs and go against any capital gain you might make on the sale. Doing up the garden before the sale and dumping furniture etc. sounds like it would fall into this category.

    It is worth noting that of you make a loss in connection to renting out a property, that loss can only be offset against other rental profits. If you only have one property, and you are not going to be renting out property in the future, making a loss on your rental business will create a tax loss that you might never get to use - just another anti-landlord tax measure !!

    Overall, it would do no harm to have a chat with an accountant on your specific circumstances.

    Good luck with the sale !!


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    #3
    jimmycrackcorm
    Registered Users Posts: 14,339 ✭✭✭✭jimmycrackcorm


    DubCount wrote: »
    This is a more complex question than it seems.

    If the costs incurred are connected with the business of renting out the property, they go towards the profit/loss for the year for income tax purposes.

    If the costs are in connection to getting the property ready for sale, they are part of the selling costs and go against any capital gain you might make on the sale. Doing up the garden before the sale and dumping furniture etc. sounds like it would fall into this category.

    It is worth noting that of you make a loss in connection to renting out a property, that loss can only be offset against other rental profits. If you only have one property, and you are not going to be renting out property in the future, making a loss on your rental business will create a tax loss that you might never get to use - just another anti-landlord tax measure !!

    Overall, it would do no harm to have a chat with an accountant on your specific circumstances.

    Good luck with the sale !!

    Shouldn't the cost be asked against the rental profits for the existing year?


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    #4
    Cat_M
    Registered Users Posts: 119 ✭✭Cat_M


    jimmycrackcorm wrote: »
    Shouldn't the cost be asked against the rental profits for the existing year?

    If I wasn't selling that would be automatic.


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    #5
    DubCount
    Registered Users Posts: 1,089 ✭✭✭DubCount


    AFAIK its about the reason for the expenditure - the intention. Take the garden being grubby and lets say you pay a gardener to come in and fix it up. If you were going to rent out the property again, that would be offset against your rental profit, as its an expense of your rental business. If you were fixing it up to improve the property for existing tenants, that would be offset against your rental profit, as its an expense of your rental business. When you are fixing it up to make the property easier to sell or more valuable to sell, then its nothing to do with your rental business - its a cost of selling the property, just like the estate agent fees or the legal fees.


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    #6
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    DubCount wrote: »
    Take the garden being grubby and lets say you pay a gardener to come in and fix it up. If you were going to rent out the property again, that would be offset against your rental profit, as its an expense of your rental business.

    Technically- its ineligible as an expense- most people claim it- but you're not on solid ground doing so.


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    #7
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    The_Conductor wrote: »
    Technically- its ineligible as an expense- most people claim it- but you're not on solid ground doing so.

    Why is it ineligible. It is clearly an overhead of the rental business.


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    #8
    Pkiernan
    Registered Users Posts: 4,310 ✭✭✭Pkiernan


    4ensic15 wrote: »
    Why is it ineligible. It is clearly an overhead of the rental business.

    Ask Revenue.

    https://www.revenue.ie/en/property/rental-income/irish-rental-income/what-expenses-are-not-allowed.aspx


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    #9
    DubCount
    Registered Users Posts: 1,089 ✭✭✭DubCount


    The_Conductor wrote: »
    Technically- its ineligible as an expense- most people claim it- but you're not on solid ground doing so.

    I always learn something new on this site !!

    Costs incurred between lettings are only allowed where the landlord is entitled to possession during the void period, or the same landlord lets the property after the void period. Good spot.


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    #10
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    Pkiernan wrote: »
    Ask Revenue.

    https://www.revenue.ie/en/property/rental-income/irish-rental-income/what-expenses-are-not-allowed.aspx

    Where on that link does it refer to such expenses.


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    #11
    DubCount
    Registered Users Posts: 1,089 ✭✭✭DubCount


    4ensic15 wrote: »
    Where on that link does it refer to such expenses.

    A More detailed Revenue document

    https://psc.ie/wp-content/uploads/2016/07/A-guide-to-rental-income.pdf


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    #12
    Pkiernan
    Registered Users Posts: 4,310 ✭✭✭Pkiernan


    4ensic15 wrote: »
    Where on that link does it refer to such expenses.

    What expenses are not allowed?

    You cannot 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. However certain pre-letting expenses on vacant residential property may be deductible.


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    #13
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    The example give was expenditure on a garden between lettings, which the conductor states is technically non-deductible. According to the links you have give such expenditure is deductible priovided the landlord is not in occupation during that period.


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    #14
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    4ensic15 wrote: »
    The example give was expenditure on a garden between lettings, which the conductor states is technically non-deductible. According to the links you have give such expenditure is deductible priovided the landlord is not in occupation during that period.

    Nope- the example given is that the landlord has reclaimed the property from his tenants in order to sell it- and wishes to spend money reclaiming the garden, doing up the property etc- prior to selling it- and was wondering if he could offset some or all of this expenditure against rental income- as the property was let in the earlier part of the year........

    If the landlord were reletting the property again- doing up the garden again *would* be an eligible expense- *if the landlord were entitled to vacant possession of the property for the period between lettings*.

    Its all semantics- and to be honest- most people do in fact claim it (that is the costs incurred on doing up a property between lettings- regardless of whether, or not, they are entitled to vacant possession)- however, if you were subject to an audit and the examiner was being sticky they could potentially make an issue of it.

    Its a murky one- and it hinges on how the tenancy was terminated, among other factors, and whether the property is going to be relet within the allowed period (6 months).


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    #15
    travist
    Registered Users Posts: 249 ✭✭travist


    Maybe you can deduct the expenses from any capital gain you may make?


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    #16
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    The_Conductor wrote: »
    Nope- the example given is that the landlord has reclaimed the property from his tenants in order to sell it- .

    Take the garden being grubby and lets say you pay a gardener to come in and fix it up. If you were going to rent out the property again, that would be offset against your rental profit, as its an expense of your rental business.


    The above is what you quated and said it was technically not allowable. From what you are now saying it is allowable.


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    #17
    Cat_M
    Registered Users Posts: 119 ✭✭Cat_M


    What if I can't sell and have no option but to put back for rental after spending X amount fixing it up ? This is a possibility as apparently 2nd hand houses are very slow to sell currently due to a lot of new builds. I'm learning this now after making the decision and after waiting nearly a year to move tenants out etc etc


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    #18
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    If you price it appropriately- there is no reason that it shouldn't sell.
    Secondhand property sells at a discount to new property for a variety of reasons- not least of which is the manner in which second hand property does not qualify for the First Time Buyers 'grant' whereas new property does.

    If you price it appropriately- and choose your prospective purchaser wisely- there is no reason it shouldn't sell.


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