What Landlords Can Claim Before Letting a Property: A Simple Guide

If you've recently bought a property to rent out, you might be wondering what costs you can claim before your first tenant moves in. Some expenses can be deducted from your rental income, while others can only be considered when you sell the property. Understanding the difference can help you stay compliant and make the most of available tax reliefs. This guide explains how pre-letting costs work, what you can claim, and where landlords need to be careful.

Revenue vs Capital Expenses

The rules come down to one simple question:

Are you repairing the property — or improving it?

Examples

✅ Revenue expenses (claimable against rent)

• Re-decorating

• Repairing leaks, replacing damaged tiles

• Replacing a worn-out kitchen like-for-like

❌ Capital expenses (claimable only on sale)

• Extensions and conversions

• Major upgrades (luxury kitchen/bathroom, new heating system)

• Landscaping (where this forms a significant improvement) or structural changes

  
  

Pre-Letting Expenses: What You Can Claim

Even before your first tenant moves in, some costs qualify as revenue expenses, such as:

• Repairs and decorating (if the property was already rentable)

• Letting agent fees

• Marketing the property

• Travel and phone costs linked to renting the property

To be claimed, these costs must:

✅ Be within 7 years before you start renting.

✅ Be the kind of expense you could normally claim once letting began.

✅ Not relate to improving the property beyond its original state.

Loan Interest on Pre-Letting Costs

If you borrowed money to cover qualifying pre-letting expenses:

• Individuals receive a 20% tax credit on interest

• Companies can still deduct interest as a business expense (currently 25% relief)

Real-World Examples

Kitchen Replacement

Old and worn kitchen replaced like-for-like:  ✅ Revenue

Luxury upgrade or expansion:  ❌ Capital

Properties Needing Work

Work Done	Likely Treatment
Bathroom repairs	Revenue
Decoration	Revenue
New kitchen (old unusable)	Mostly capital
Extension	Capital
Full rewiring	Could be either (depends on scope)

Legal Boundary Disputes

Legal fees to resolve boundary issue: ❌ Capital cost (claimed when selling)

What Records You Should Keep

To support tax claims, keep:

• Receipts & invoices

• Contractor quotes and contracts

• Bank & Mortgage statements showing payments

• Annual Mortgage Interest Summary from your lender.

• Planning/building documentation if applicable

• Before-and-after photos — very useful for proving repairs

  
  

HMRC can ask to see evidence, so organised records are essential.

Final Thoughts

Managing rental property comes with important tax decisions — especially before tenants move in. Knowing what counts as a repair and what counts as an improvement can save you time, stress, and money later.

If you’d like support with rental property tax or understanding allowable expenses, feel free to get in touch — we're here to help.

Book a free consultation