Using rent to reimburse renovation costs

I have owned a property 50-50 for about 5 years with my brother that my father has lived in but is currently vacant. We intend to smarten it up and rent it out. I will be paying for the renovations such as a new kitchen, painting and decorating. Will these renovations be capital or revenue? My brother’s suggestion is that I take the rental revenue until I have been reimbursed and then we split it 50-50. It is unlikely that the rent will cover the costs in just one financial year. Is this "allowed" or would there be tax consequences for either of us from doing so? If not, is there a "normal" way to do this so that neither of us lose out financially?

Hi,

In terms of making repairs to the property in order to bring it up to the standard of being able to rent out to tenants, expenses incurred such as painting and decorating would be classed as revenue costs. 

PIM2025 - Deductions: repairs: overview

If the replacement of the kitchen is on a like for like basis and works the same way as it previously did, then this may also be claimed as an allowable expense.

PIM2030 - Deductions: repairs: is it capital?

As the property is split on a 50/50 basis, although allowable, we would expect that any expenses incurred should be reflected in the same way as rental income has been received, 100% for the duration of time until costs are reimbursed.

Thank you.