Claim expenses after the tenant leaves my property
I rented a house for the first six months of this year. I then spent the money on renovations and cleaning etc. after the tenants left.
Am I allowed to claim expenses even if the rental and expenses don’t match?
M MB, Galway
We hear a lot about the rental market right now and it is clear that there is a huge demand for housing and a limited supply. Rents are going up and this can seem like a very attractive proposition to landlords. But renting is a tricky business, with many rules and procedures to trip up the unwary.
Anyone who has rented a property knows that there is necessarily work to be done when a tenant leaves. With the best will – and tenant – in the world, there will be things to do before attracting a new tenant.
While large institutional lenders have entire departments to sort through the paperwork and teams of advisors to ensure they are maximizing their potential return from the property, small homeowners need to make sure they are working to stay on course. without losing authorized reliefs and expenses.
One of the general rules about claiming rental expenses is that you cannot claim expenses incurred before you decide to rent or after you have completed the rental. And this is the crux of the matter for you.
It is not clear whether this was your first rental of this property, nor is it clear whether you intend to rent it out again after the renovations or not. The answer to that last question will largely determine what you can claim.
There is a general prohibition against claiming expenses after the final rental of a property. The unassailable logic is that if the property is no longer available for rent, it makes no sense to give relief for the expenses incurred for its upkeep or upkeep.
However, if you are in between rentals, this is a completely different situation. The Tax Administration’s Rental Income Guide states: “Expenses incurred in the period between rentals are deductible provided the landlord did not occupy the premises during the period and a new lease is granted. “
So if you moved in after the tenant left you won’t be able to claim, but if you didn’t live there but work has been done you will be able to claim rental income – as long as you have people to do it. work. A separate expense exclusion applies to the cost of your labor.
It doesn’t matter whether you are fully qualified to do the job or not, an owner cannot claim their own time, although it can be cheaper and more efficient at times when such skilled craftsmen can be hard to find.
The same rules and logic apply to expenses incurred before the first rental of the property. This means that you will not be able to invoice for improvements or modifications made to the building between the time you bought it and its first rental.
However, keep in mind that if you had expenses in this area, they could be deductible from capital gains on the sale of the property as development expenses, depending on the nature of the work.
Mortgage interest is also not payable before the rental. You can claim it while the property is rented, but not before the first rental.
There are a few limited exceptions to this rule. These relate specifically to the costs incurred in the rental process but before the registration of the first tenant. They include any costs incurred for advertising the property or rental fees paid to a real estate agent.
Legal fees paid upstream of a first rental are also eligible, such as those related to the drafting of rental contracts, etc.
According to the Irish Property Owners’ Association, which primarily represents private landlords, there is an exception that allows homeowners to claim up to € 5,000 in expenses for improving a property that has been vacant for at least one year before the first rental – as long as it is rented before the end of this year.
Relief only applies to affected properties rented between Christmas Day 2017 and the end of 2021 and expenses must be incurred in the year prior to rental.
So, assuming you’re in between rentals or the property is rented out, what can you expect in the normal course of events.
Obviously, as with the pre-rental exemptions, all legal or estate agent fees associated with the rental of the property are eligible, along with the related accounting fees.
You can also claim the property registration fees from the Residential Tenancies Commission, as you are required to do, and the insurance premiums you pay for the building and for liability. civil.
You can also claim capital deductions. Essentially, it’s the depreciation – or wear and tear – of the furniture or fixtures you buy for the rental property. These can be amortized over eight years at a rate of 12.5% per year.
As with all expenses that you intend to claim, be sure to keep receipts for these expenses. Revenue informs you that these receipts must be kept for six years after the year in question, unless Revenue expressly advises you otherwise.
Maintenance or repairs, such as the work you were talking about initially, are deductible from rental income – as long as the property is rented or re-rented. This includes things as mundane as cleaning or applying a coat of paint as well as more serious repairs for new doors or windows, sorting out moisture, or repairing a roof.
Most tenant contracts these days will make them responsible for utility charges on things like utility charges, bin collection, utility, heat, and phone bills, but otherwise the landlord may claim.
Finally, of course, for the duration of the rental period, you can claim the mortgage interest on any loan used to purchase the property as well as the cost of mortgage protection on the loan.
Keep filling out the paperwork or you will end up losing. Income will not be interested in “estimated” expenses unless you can support them with receipts. And remember, if you plan to do the work on the property yourself to save money or time, so be it, but you won’t be able to get anything back on that work.
Please send questions to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email [email protected] This column is a reading service and is not intended to replace professional advice. No personal correspondence will be exchanged
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