Self Employed Landlords Deductions and Expenses

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A Landlords' rental business expenses have to be "incurred wholly and exclusively for business purposes". In addition the expenses must not be capital in nature.

What is the wholly and exclusively for business purposes rule?

When deciding whether an expense was wholly and exclusively for business purposes, all the evidence has to be considered.  This evidence could include documents, agreements, notes of meetings and any other records.  What you say is the purpose of the expenditure is part of the evidence but the facts may point to another purpose.


What if a cost has a dual purpose?

trictly, if an expense is not wholly and exclusively for the purposes of the property business, it may not be deducted. In practice, though, some dual purpose expenses include an obvious part which is for the purposes of the business. We usually allow the deduction of a proportion of expenses like that. 

Where costs have dual purpose, partly private and partly business, difficulties may arise.  In theory an expense not incurred wholly and exclusively for the purpose of the business may not be deducted.  However, in practice, some dual purpose expenses include an obvious part which is for the purpose of the business and that element can sometimes be allowed.  A deduction can only be made for the business element where a definite part or proportion satisfies the wholly and exclusively test.

Is capital expenditure an allowable rental business expense?

Capital expenses are generally not deductible when calculating rental business profits.

For example,  neither the capital cost of the property that is let nor the amount of any depreciation of the property can be deducted in computing taxable profits. Nor can a loss on the sale of a property  be deducted.

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