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Posted Tue, 26 Oct 2021 12:45:24 GMT by A M
Hi HMRC In my residential home, I bought a new kitchen 10 years ago for approx £3000 (I still have original receipt). We're now putting in a new kitchen and I can sell my existing kitchen via auction/market place websites for approximately £1000-£1500. However, one of my buy to let property, needs its kitchen updating so instead I'm going to refit the old kitchen from my residential home in my buy to let property. I have a few questions: 1) For my rental income/expenses, can I expense the cost that the buy to let property is effectively paying for these kitchen units? 2) If so, what number do I put as the expense for the buy to let property? Can I put what I see is fair value (i.e. £1000-£1500) or does HMRC have some depreciation rates which I need to use? 3) I assume there's no capital gains/losses consideration in me selling the kitchen from my residential home at a reduced price vs what i paid for since there's no capital gains/losses in residential homes. I'd appreciate a bit of guidance on this as I have many other similar examples which this can be useful for i.e. selling old domestic furniture from my residential home to the buy to let property (this works out best all round since there's less wasteage in buying new furniture and reduces my total costs vs buying new furniture for the buy to let property) Thanks
Posted Fri, 29 Oct 2021 08:51:07 GMT by HMRC Admin 19
Hi,

As this was not an expense incurred by the buy to let you would not be able to claim the cost of the kitchen.

Also it has not been used wholly and exclusivly by the rental property so this would also make it disallowable. However you would be able to claim any installation costs associated with putting the new kitchen in the buy to let property. There would be no Capital Gains implications if you preferred to sell the kitchen. 

Thank you.
Posted Fri, 29 Oct 2021 09:15:39 GMT by A M
Thank you for the response. Can I please query this further: 1) I was under the impression that we can make an apportionment under the wholly and exclusively aspect. So in this case the kitchen was first used in our residential home but it is now being wholly and exclusively used in our buy to let property. I’m not fully understanding why I can’t effectively sell the old kitchen directly to the buy to let property? 2) another example is this, I sell my old kitchen to a 3rd party person via marketplace. But then later the buy to let property buys an old used kitchen from a 3rd party which would make it permissible. It’s not making too much sense to me why I can’t sell directly to the buy to let property instead of me selling my kitchen to a 3rd party and then the buy to let buying from a 3rd party. I have another query too please. I own a few buy to let properties and I need to buy a tablet to complete all the tenancy admin and carrying out inventory. The tablet will be used wholly and exclusively for the buy to let’s (I have a separate tablet for personal use). However, I’d like to share this expense with other family members who will also use it for their buy to let properties (again using it wholly and exclusively). How do we treat the expense in this scenario? Do I split cost of iPad between the different people using it whollya be exclusively for their buy to let’s or do I put the expense all under my rental Expenses since I am the one purchasing it? Thanks
Posted Mon, 01 Nov 2021 12:34:47 GMT by HMRC Admin 17

Hi,
 
The updating of the kitchen would be an improvement so this would be a capital items and no expense would be allowed.

PIM2030 - Property Income Manual - HMRC internal manual - GOV.UK ( www.gov.uk   ).

Only the owner of the tablet can claim capital allowances/expense.

These can only be claimed for the t/p business and nobody elses.

If other people use it this will reduce the business proportion t/p will be able to claim.

Thank you.
Posted Mon, 01 Nov 2021 12:48:23 GMT by A M
Hi Thank you for the response. 1) kitchen - we’re not upgrading the current kitchen however in the buy to let property. We’re replacing it with an equivalent kitchen as the existing one is damaged in several areas. It’s just that I want to replace it with an old kitchen from my residential home. So my question is whether I am able to expense the equivalent price that the buy to let property pays for the kitchen. 2) tablet- how does above change please if it’s jointly owned by 2 people who each use it for property income. Can they then both claim this capital allowance/expense in a proportionate way? Lastly, The tablet cost would be a capital cost rather than income, is that correct? How does this change though if we’re replacing an existing old tablet with a new one (as previous one stopped working). Is this now an income expense? Thanks
Posted Tue, 02 Nov 2021 14:40:33 GMT by HMRC Admin 10
Hi

You cannot claim for an expense unless the cost has been incurred.

So you cannot credit an expense.

You have talked about selling the kitchen to the business.

There are issues with this as in effect you are selling the kitchen to yourself.

If you want to consider this further you will need to write in so we can escalate the issue.

If the tablet is shared both owners could claim their share of the capital allowance, i you are using traditional accounting, or as an expense if using cash basis.

Thankyou.

Regards
Posted Mon, 21 Feb 2022 17:53:46 GMT by Rich Gibson
I love this topic. Thank you, A M and Admin!

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