Offsetting renovation costs against rental income.

[mkc]

Presently buying a holiday home which needs about 50k investment to bring it up to date (like heating !!). Currently plan to keep it purely for family use only. Just wondering if down the road we do decide to let it out will I be able to offset the renovation costs against rental income ?

 

[bacchus]

No is the short answer. You can only offset renovation costs incurred between rental periods, but not before any rental.

 

[mkc]

So if I rented it out for a week or two before the renovations started then I could offset the costs ?

 

[bacchus]

I doubt very much. I am sure there is further conditions that revenue will impose , like minimum first rental period or something like that , before renovations cost can be offset. Worth checking though....

 

[delgirl]

There is also a difference between 'repair and maintenance' costs, which during the course of a tenancy or in between tenancies can be offset against rental income, and 'renovation' costs which imply structural changes, which are not allowable.

You should keep receipts for structural / renovation work carried out to the property as these costs can be deducted from any gains which may arise on the sale of the property.