The treatment of repairs and improvements

Ongoing repairs to the fabric and structure of a let property are expenses which can be deducted from your rental income. Examples of such repairs include:

• exterior and interior painting and decorating,
• damp and rot treatment,
• mending broken windows, doors, furniture and machines such as cookers or lifts,
• re-pointing, and
• replacing roof slates, flashing and gutters.

But you cannot deduct expenditure on improvements, or expenditure needed to bring a property up to standard before the first letting. Expenditure on improvements can be added to the costs of the property and may reduce any capital gain when you sell the property.

The dividing line between improvement and repair can be difficult to judge. For example, if the windows needed replacing in the property you own, but you replaced single glazed windows with double glazed windows, is this a repair or an improvement, or a bit of each? In cases like this, you will be allowed the normal ‘modern equivalent’ – so double glazing is accepted as a ‘repair’ and you can deduct all the costs against your rental income.

Where there is a significant element of improvement – such as you replace the kitchen, then at least some of the expenditure is likely to be treated as improvement, as so you cannot deduct this from your rental income.