# New Windows. Repair or Capital Expenses?



## gearoidc (16 Nov 2011)

I stumbled on these today. It contradicts a lot of what I've read on here about the subject.

This is from the UK Govt Revenue site-




 "Problems can arise with old assets over where is the dividing line between a repair and an improvement. 

A repair or replacement of a part of the asset using modern materials   may look like an improvement because of the greater durability, superior   qualities, etc of the new material. If the new materials are broadly   equivalent to the old materials then the cost is normally an allowable   expense.

*EXAMPLE:
Kate has the windows of her offices replaced. The old windows were   singled glazed. She just wants to replace the old units. Building   standards have improved and the types of replacement windows available   from retailers have changed. The replacement windows are double-glazed.   This shows the effect of changes in technology. At one time replacing   single-glazed windows with double-glazed windows was regarded as an   improvement and therefore capital expenditure. But times have changed.   Double-glazing is now standard and is the modern equivalent. Replacing single-glazed windows by double-glazed equivalents counts as allowable expenditure on repairs*."


........And the following is from a UK legal/tax advisory website.

*[broken link removed]
*

*" Look to claim costs as 'revenue' costs*

If you can  claim large costs as 'revenue' costs rather than 'capital'  costs, then  you can reduce your annual property income tax bill in a  big way.
Sometimes  it's easy to determine whether a cost is of a capital nature  or not.  For example, if you have had a new conservatory built, or even a  new  bedroom added, then this is clearly a capital expense. This is  because  it has increased the value of the property.
But sometimes distinguishing between the two costs isn't so clear.
*Consider  the replacement of windows.* *If you currently have rotten  single glazed  windows, then you will be able to replace them with UPVC  double glazed  windows and offset the entire cost against the rental  income*. *There will  be no need to class this as a 'capital cost'.*
*This is because  it's generally accepted that standard windows used  in modern properties  are UPVC and not wooden single glazed windows, so  you're replacing the  current standard window fitting with a  like-for-like window.*
Remember  that if you can class a cost as a 'revenue' cost, it will  improve your  cash flow as you will pay less property income tax."

Any opinions on this particular viewpoint?


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## oldnick (16 Nov 2011)

Irish Revenue allows "repairs" and defines a repair as"_ restoration of an asset by_ _replacing *subsiduary* parts of the whole asset"_ (my bold type).
 (And I dont think they mean that the window frames are a subsiduary part of the property !)

So, certainly a broken window  or  replacing some of a rotten frame are repairs.
 But whether Irish Revenue would go along with UK Revenue regarding replacing the lot and claiming as a running expence...doubtful.

But - and this is wrong advice which other posters will reprimand me for......

If you feel that  there are good grounds for claiming something as an annual running expence -rather than capital expenditure, then do so claim. 
After all, the UK Revenue has a detailed guide on claiming new windows as a running expence so it would seem reasonable if one believed the same would apply here. 

Look- it can be more advantageous to put something down as a capital expence.It depends on many factors, mainly your tax bracket.


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## mandelbrot (16 Nov 2011)

gearoidc said:


> Any opinions on this particular viewpoint?



Have you asked the tax office? And not just the poor pleb who answers the switch - tell them that you need confirmation in writing so an Inspector will have to deal with it, and then see what they say, that way you'll be beyond reproach...


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## gearoidc (16 Nov 2011)

oldnick said:


> If you feel that  there are good grounds for claiming something as an annual running expence -rather than capital expenditure, then do so claim.
> After all, the UK Revenue has a detailed guide on claiming new windows as a running expence so it would seem reasonable if one believed the same would apply here.
> 
> Look- it can be more advantageous to put something down as a capital expence.It depends on many factors, mainly your tax bracket.



I'm not sure what you mean by a "capital expense". Do you mean the annual 12.5% wear-and-tear?




mandelbrot said:


> Have you asked the tax office? And not just  the poor pleb who answers the switch - tell them that you need  confirmation in writing so an Inspector will have to deal with it, and  then see what they say, that way you'll be beyond reproach...



A bank official pal told me stories of colleagues who would refuse mortgage applications (remember them?) sent in for final approval, simply because they were too hungover to bother reading them.
I have this (maybe unfair) suspicion that an inspector in Revenue might act in a similar fashion.


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## mandelbrot (16 Nov 2011)

gearoidc said:


> I'm not sure what you mean by a "capital expense". Do you mean the annual 12.5% wear-and-tear?



Yes that's what he means, but in the case of windows I don't think they can ever be that. They'll either be repairs (on the basis outlined in the HMRC documents quoted), or they'll be enhancement (relevant to CGT).

To qualify for capital allowances, they would have to be fixtures & fittings, but I've never heard of anyone moving house and bringing the windows with them! 



gearoidc said:


> A bank official pal told me stories of colleagues who would refuse mortgage applications (remember them?) sent in for final approval, simply because they were too hungover to bother reading them.
> I have this (maybe unfair) suspicion that an inspector in Revenue might act in a similar fashion.



I think you can safely put that suspicion aside! In my experience Revenue is the most efficient Govt Department.


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## oldnick (16 Nov 2011)

Actually I did mean  a capital cost as in improving a property which is liable to CGT.  I wrote it badly - sorry.
I meant that depending on one's income -and especially if CGT increases as many think it will - then it may be worth putting something down as an capital improvement rather than an expence.


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## mandelbrot (17 Nov 2011)

oldnick said:


> Actually I did mean  a capital cost as in improving a property which is liable to CGT.  I wrote it badly - sorry.
> I meant that depending on one's income -and especially if CGT increases as many think it will - then it may be worth putting something down as an capital improvement rather than an expence.



Ahh fair enough, sorry for putting words in your mouth there so!


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## oldnick (17 Nov 2011)

No, no it was my fault for lack of clarity. 

  I find this thread of some interest because despite my usual pompous spouting of opinions I confess ignorance and confusion as to what expence is actually a running expence, a wear-and-tear exepnces like furntiure,carpets and various fittings -or capital improvements to set against CGT.

Most are obvious but  ,like the new windows above which i would have put down against CGT there are some that i wonder about -a new fitted kitchen ? Replacing a broken-down conservatory ?  A garden shed?

I'm inclined to put these down as wear-and-tear. Obviously a bricks-and-mortsr extension can be set against CGT -but a small glass conservatory?  

Is there is written defintive guide on this -as the UK manual seems to be?


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