Foreign rental income

What expenses and deductions are not allowed?

You cannot claim:

  • pre-letting expenses
  • post-letting expenses
  • capital expenditure
  • the cost of your own labour if you carry out repairs to the property.

You can only claim expenses for the term of a lease. The exceptions to this are expenses such as letting fees, advertising fees and legal fees before the first letting.

You cannot claim expenses or deductions for any time that you or others stay in the property rent free. You must divide the expenses and deductions between that period of time and the time that it was rented out.

Why are pre-letting expenses not allowed?

You can only make a claim for expenses during the term of a lease. You cannot claim interest payments between the time you bought the property and when you let it out.

Expenses, including interest payments between lettings, are allowed as long as you do not live in the property at that time and re-let it later.

Can you claim travel costs such as airline tickets and car hire?

You can only claim for the cost of travelling to your property if the journey is undertaken wholly and exclusively for the purpose of earning rental income from the property.  

You cannot claim for private travel costs where you or your family also use the opportunity to take a short break, a holiday or to view a property you do not own and let.

Next: How to calculate your taxable foreign rental income