I recently took on a client who told me it was just one buy to let, joint with her husband and there would be some pre-letting renovation expenses to include as it was purchased May 2015 and let from August 2015. Nice and simple.
I have now been told that they lived in the property after it was purchased and that they have written to HMRC electing to claim this as their PPR until the letting commenced, at which point they moved out into another house, which I am assuming was owned already.
Therefore my questions are:
a) Can they claim any of the pre-letting renovation expenses (decorating, kitchen and bathroom replacement etc), furniture costs or apartment service charges ? I assume not as this would be a bit like having your cake and eating it as they have now protected themselves against any increase in value arising from these works by claiming the PPR relief.
b) Would it make any difference if they only purchased the property with the intention of renting it out and lived on site as they were doing the renovation themselves? (Again I suspect not).
c) Would they be able to claim the various fees incurred in taking out the mortgage in May 2015? (Again I suspect not).
I have probably answered my own questions but as I have not dealt with this scenario before I would appreciate your input, plus any guidance on anything that I might have overlooked!
Thanks.
-- Edited by Dinky on Wednesday 14th of December 2016 06:19:09 PM
One reason why I steer clear of such clients, besides the property thing bores me rigid (or maybe thats just cos I have two erm, acquaintances who chat on about such things all the time, perhaps to get freebies so I treat it was white noise), so sorry to do this to you....but hope it helps point you in the right direction.
Thanks for the link. I would have steered clear if I had known the full facts at the outset!
I guess it would be difficult to argue that the property was required solely for the purpose of the rental business now they have made the PPR election.
Oh well, once bitten and all that......
Thanks again.
Hi Sue
Have you actually done any work, other than the initial discussion and research? Are they needing to file by 31st Jan? If not you might consider disengaging. No shame in it. You could suggest it's because they mis-represented the set up, although that could just put their backs up, so maybe go with the suggestion they would be better helped by someone else.....be great if you already know someone you can introduce it to.
Or, of course, it's a development opportunity . Don't you just love clients!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I want to keep the client since in theory after this year it should be straightforward and therefore a nice little earner. Yeh right....
Having asked the audience I will move on to phoning a 'friend' and then if all else fails, go 50:50 (that's a joke BTW....)
I will, however, make it clear to the client in writing that I do not offer advice on tax planning for CGT purposes!
Thanks again.
. Don't you just love clients!
I will, however, make it clear to the client in writing that I do not offer advice on tax planning for CGT purposes!
Thanks again.
