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Sale of rental property

  • Member
  • Practice Licence
  • 33 posts
  • # 116926

hi,

my client recently sold a property he’d been renting out but the tenants refused to leave and also trashed the property. Does anyone know if the cost of making the property good again and legal costs of bailiffs are deductible? 

On another note if a client doesn’t want your help with a tax check do we have any obligations to answer hmrc or do we just ignore the letter? 

Thanks 

karen 

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  • 14 posts
  • # 116935

The cost of making good the property and the cost of bailiffs/eviction will be tax deductible (as they are not of a capital nature).

With regards, to the letter, I expect that if you were legally obliged to provide answers it would be clear from the letter under which legal provision you were obliged to do so. If HMRC wrote to you simply because you were on their records as the client's agent, I suppose you could write to them to explain that you have not been engaged by your client to respond to questions relating to the tax check?

  • Member
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  • 14 posts
  • # 116936

Further to my earlier post, I would like add that on the Forum page the ICB has provided a phone number for formal guidance.

 

Yolande

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  • 33 posts
  • # 116937

Yolande said:

The cost of making good the property and the cost of bailiffs/eviction will be tax deductible (as they are not of a capital nature).

With regards, to the letter, I expect that if you were legally obliged to provide answers it would be clear from the letter under which legal provision you were obliged to do so. If HMRC wrote to you simply because you were on their records as the client's agent, I suppose you could write to them to explain that you have not been engaged by your client to respond to questions relating to the tax check?


 Thanks for reply..I forgot to mention that my client then sold the property, rather than taking on another tenant. Does that make any difference? I will have a look for a phone number as you mentioned but i may just write to hmrc to tell them my client declined any help etc. 

Regards 

karen

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  • Practice Licence
  • 14 posts
  • # 116938

The number is under Technical Queries on this page: https://www.bookkeepers.org.uk/Forum

 

It is still not capital expenditure if it was incurred to undo damage by the tenants.

 

Will somebody else be dealing with the capital gains aspect of the sale?

 

Yolande

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