Student claiming back renovation costs on rental property

A

Aiden

Guest
Hi all,

I am a final year student who recently inherited a house which I am renting out. As I am a student I have no other income. It is most probable that I will be a student for another two years and thus will have no other income other than the rent which is about €500 per month.

At present, some necessary rennovations are being carried out on the house including putting in new windows and door to the rear and some remedial works to the plumming. The total cost will be about €7000.

As I have no money, my parents are providing me with an interest free loan.

Can I set these costs against rental income in the future and how?
Can I get back the VAT I pay and how?

All help will be gratefully appreciated.............

Aiden
 
Re: Student claiming back rennovation costs on rental property

You can not get the VAT back unless you register for VAT and if you do that then you will have to charge VAT on the rental money so it will not be worthwhile.
 
Re: Student claiming back rennovation costs on rental property

Also please note that the fact that you are a student is irrelevant. The reason you won't pay any income tax is because your income is too low, not because you are a student.
 
Re: Student claiming back rennovation costs on rental property

You can claim the cost of repairs (eg fixing the plumbing) as a expense in the year it occurs only, not at some point in the future when you may have an income tax liability. Any capital expenditure (ie new windows) you can claim as a deduction when working out your CGT liability when the property is sold.
 
Can the cost of the windows not be used as an expense and spread over 8 years?

Lets say I decided to put in a driveway, kerbing etc on renatal income can I use this as an expense over 8 years or can I only use it to decrease my CGT libality if/when I sell?
 
lotus said:
Can the cost of the windows not be used as an expense and spread over 8 years?

Lets say I decided to put in a driveway, kerbing etc on renatal income can I use this as an expense over 8 years or can I only use it to decrease my CGT libality if/when I sell?
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No, windows and driveway are seen by Revenue as improvements and as such are classed as capital expenditure and can only be used as a deduction for CGT not income tax. However, if a window gets broken or you get potholes in your driveway, the repairs are a deduction against income tax for the year in which the costs of repair are incurred. Read the Revenue guide to rental income [broken link removed] which sets out what is/isn't allowable.
Anyway you are entitled to the single persons tax credit of €1630 (2006 figure) which will cover income up to €8,150 so you should only have a small liability on the rental income. You may also be entilted to other tax credits for refuse/rent relief/etc, check out the Revenue website to see a complete list.
 
xeresod said:
No, windows and driveway are seen by Revenue as improvements and as such are classed as capital expenditure
Click to expand...

...not in all circumstances. The OP should get proper professional advice on this area as there are some subtle complications.
 
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