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  • Tax

    Disallowable Expenses question

    Hi Everyone,

    My accounts are telling me that the following are disallowable expenses - can anyone confirm whether this is right please?

    - The deposit we sent to secure the conveyancer

    - Building survey of a property we bought

    - Mortgage application for a property we bought

    - Review of a legal pack for a property we didn't buy

    - Travel to viewings and to our properties

    - Travel & accommodation to/at property education

    - Refreshments at property meetings

    Thanks in advance,

    Heather.

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    Hi Heather

    There may be a reason which you have not articulated in your email so I have tried below to give you a little more meat on the bone.

    - The deposit we sent to secure the conveyance - seems like capital to me so against CGT. You got this back when you bought the property. It is just netted off the purchase price.

    - Building survey of a property we bought -  - seems like capital to me so against CGT

    - Mortgage application for a property we bought - depends when your "property business started". If it had already started then this is a finance cost. If not consider whether pre-commencement rules will apply - suspect they will.

    - Review of a legal pack for a property we didn't buy - If your property business had already started then this is a deductible cost. If not then no.

    - Travel to viewings and to our properties - If your property business had already started then this is a deductible cost. If not then no.

    - Travel & accommodation to/at property education - If your property business had already started then this is a deductible cost. If not then no.

    - Refreshments at property meetings - This is harder. If it is to secure space in a coffee shop to have a business meeting then the intention is to have a meeting space then its ok (if you had a property business at the time) otherwise I think duality of purpose rules will apply and no.

    Your accountant should be advising you on these rules in more detail so you can make proper decisions in the future. Its a common issue with compliance focussed accountants.

    If you need any help then of course we can do your tax for you.

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    I am not an accountant or tax advisor and can only tell you what our accountant has told us to claim. We definitely claim travel to viewings, properties, network meetings and trainings. We also claim conveyancing costs for properties that did not buy.

    However, survey and conveyancing for properties that have been purchased are capital expenditure and can only be set against CGT when the property is sold in the future.

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    Ian Boddison 
    http://www.boddison.com 
    Author of The Magic of 3 Weeks 
    http://www.magic3weeks.co.uk

    Lets Delight Ltd
    Looking after good tenants for life
    We promise to never terminate a tenancy or evict a good tenant even when their circumstances change
    http://www.letsdelight.co.uk


    Hi  J Stuart Thomson,

    Thank you very much for your most helpful response.  We are currently using our business accountant to do our tax returns as we currently only have 2 properties, obviously we may need to look at this in the future.  To clarify my vagueness:

    We already had a rental property (purchased in 2016) so from what you say it looks like we should be allowed; the mortgage application, review of legal pack, travel to viewings & our properties, travel and accommodation to/at property education?

    The refreshments were meetings with property sourcers in cafes (as neither of us have offices and it was a convenient location), a sandwich at the National Landlords Investment Show, coffee at an auction we attended (but didn't get the property) and twice for a sandwich when on all day viewings with agents.  Am I being petty (every little helps!)?

    I'll mark up the conveyancing and building survey as CapEx.

    Thanks again,

    Heather.


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    Nasilsiniz Ian?

    Thanks for your reponse which backs up what J Stuart Thomson said.  Do your accountants allow you to claim for refreshments at meetings/property events and if so, do they place any limitations on them?

    Heather.

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