Clarification on the type of Expense

Hi, I have several expenses for my property and wish to know whether they should be counted as rental expenses or not. Below is a list of three kinds of expenses: 1) A new heating system was newly installed for the tenant as the previous one was disconnected (and removed) by the previous property owner. 2) An oven was replaced as the timer of the old one malfunctioned. In addition, 2 beds were replaced as the existing were too old to provide adequate support, and a bed frame was replaced for being broken. 3) Payment to a tax accountant for preparing my tax return last year that involves only income and expenses on my property I am thinking that 1) is a capital expense and should not be included. 2) is rental expense and 3) is not. Please let me know if this is correct. Best regards, Henry

Hi,

You can deduct expenses from your rental income when you work out your taxable rental profit as long as they are wholly and exclusively for the purposes of renting out the property.

As long as the new heating system is the closest equivalent in capability, then the replacement system will be a revenue repair. However, if the previous owner disconnected and removed the system, this would suggest that the system was not in place when you purchased the property. If that is the case, then this would be a capital expenditure.

Provided the oven is replaced with a similar standard oven and does the same job as before, then this is a repair and the expenditure is allowable. The replacement beds will also be allowable expenditure. Accountant’s fees incurred through your rental business are an allowable expense. Further information can be found here:  

BIM46920 - Specific deductions: repairs and renewals: what is a repair: different materials

BIM46925 - Specific deductions: repairs and renewals: what is a repair: changing technology

Thank you.