All properties need some maintenance from time to time; a lick of paint there, a new floorboard here. Sometimes the work required is a bit more substantial such as a replacement window or a new conservatory, and this can prompt the Tax Inspector to start asking questions.

The Revenue always want to know whether the amount spent on the property is for repairs or improvements. The difference is that the
cost of repairs can be set against the rental income, but an improvement adds to the value of the property so you can only get tax relief for the expense when you sell the building.

It is not the quantum of the cost that determines whether the item is a repair or an improvement, but the nature of the work. If you replace an old wooden conservatory with a new one of the same size built using modern materials, the cost should qualify as a repair. However if the conservatory is a completely new addition to the property it will count as an improvement and the cost is not deductible against the rents.

The boundary between a repair and an improvement can also move over time. The windows in a house built over 20 years ago are likely to be single glazed, but if you need to replace one the standard modem equivalent will be a double glazed unit. The Revenue used to argue that the double glazing represented an improvement, so would not allow a deduction for the cost of the replacement window. However they have recently changed their approach, and now allow landlords to deduct the cost of double glazed windows where they replace single glazed ones.

Ask us to help fight your corner in any repairs/ improvement argument you have with the Inland Revenue.

Source: Inland revenue statement on let property repairs
Tax bulletin 59