You can usually claim the cost of a kitchen replacement in a rental property , but how it is treated for tax purposes depends on the nature of the work done. Here’s how it breaks down:
- Repair or Replacement of Like-for-Like
- If you are replacing a kitchen on a like-for-like basis (e.g., same standard, no significant upgrades), this counts as a repair.
- Repairs are considered allowable expenses and can be deducted from your rental income as part of your property income tax calculation.
- Improvements or Upgrades
- If the replacement involves significant upgrades, such as installing high-end fixtures, adding new features (e.g., a dishwasher if there wasn’t one before), or reconfiguring the kitchen layout, the cost might be classified as capital expenditure.
- Capital expenditure cannot be deducted from your rental income directly. It would then be offset against Capital Gains Tax when you sell the property.
- Part Repairs and Part Improvements
- If your work includes both repairs and upgrades, you may need to apportion the costs between revenue expenses (deductible repairs) and capital expenses (improvements). HMRC expects a reasonable and fair allocation.
