Buy to Let - what are allowable expenses?

You can normally deduct the cost of ordinary expenditure on repairs. ‘Repair’ means the restoration of an asset by replacing parts of it.  An example of this would be the cost of repairing roof tiles blown off by a storm.

There won’t be a repair if a significant improvement of the asset beyond its original condition occurs, which would be classed as a capital improvement. For example, in the above scenario you took the roof off instead and added an extra storey.

Perhaps a more genuine scenario is where there is an adequate but old kitchen and you replace it with a brand new built-in kitchen with appliances etc.

Examples of repairs that are normally deductible in calculating rental profits:

  • Exterior/interior painting and decorating
  • Stone cleaning· 
  • Damp and rot treatment
  • Mending broken windows, doors, furniture and items like cookers or lifts
  • Re-pointing· 
  • Replacing roof slates, flashings and gutters· 
  • Replacing lead pipes with plastic pipes· 
  • An allowance for wear and tear may be made

Examples of non deductible capital expenses are:· 

  • Expenditure that adds to or improves the property· 
  • The cost of refurbishing or repairing a property you bought in a run down or derelict state· 
  • The cost of a new piece of land next to the property you let
Other costs which may be offset:· 
  • Council tax and ground rents (if a leasehold property)· 
  • Insurance against loss of rents, but any income received as a result of such insurance must be treated as an income receipt in the same way as the rent · 
  • Cost of rent collection (bank charges) or letting agency· 
  • Loan interest on the mortgage· 
  • Legal and professional costs incurred for the purpose · 
  • Advertising costs when trying to find a tenant for the property · 
  • Losses carried forward from the previous tax year

Please note: although the FSA does not regulate most Buy to Let mortgage advice, check that the broker concerned will treat you with the same skill, care and diligence as if they did.

See also:
Buy to let mortgage calculator: how much can I borrow?
Buy to let mortgage calculator: how much rent should I charge?

phone Book a call with an adviser:
Your preferred time:
Your name:
Your preferred telephone number:
Your other telephone number:
Your email address:

green At L&C every mortgage is a green mortgage

Our Lifetime Value

We will review your mortgage regularly to ensure you are not paying too much.