Empty rental property repairs or improvements – are the costs deductible? by Alex Chrysostomou

15th September 2022

Where a property is let out, there are likely to be periods when the property is empty, either between tenants or, in the case of a holiday let, between guests. Properties need to be maintained, and it is easier to undertake any work that may need doing, such as redecoration, while the property is empty.

Generally, expenses are deductible in computing the profits and losses for a property business as long as they are revenue in nature and the expenses are incurred wholly and exclusively for the purposes of the business. If the landlord has other properties in the the purposes of the business.  

Repairs v Improvement

Where significant work is undertaken, it is important to understand the distinction between repairs, which essentially maintain the property, and improvements, which enhance it. A repair will include replacing roof tiles blown off in a storm, whereas a new extension would constitute an improvement. Repairs are revenue expenses which can be deducted, whereas improvement expenditure is capital expenditure which cannot. same property rental business, as profits are calculated for the business as a whole, any allowable costs relating to the empty property are considered when calculating the profits for the business as a whole. If there is only one property, the business will continue as long as the intention is to relet and is available for letting once the work has been undertaken, the costs remain allowable. If the property is used privately once the work has been undertaken, and the costs relate to the private use, for example, changing the décor for personal taste in preparation for use as a residence, a deduction is not available as the costs are not incurred for Get in touch to discuss rental property.

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