Tax Data

Help & Advice

Repairs/Capital improvements

It is important to distinguish correctly between repairs, which are deductible from rental income and capital improvement which are treated as part of the base cost for capital gains tax purposes.

The broad difference is that repairs involve placing as asset into the condition that it originally was, whereas capital expenditure involves improving it in some way. Having said that, a cost normally remains revenue where any improvement merely arises because you are using modern materials broadly equivalent to the old ones. For example, replacing wooden single glazed windows with modern UPVC double glazed windows can be classed as revenue. The Revenue accept that expenditure to rectify dilapidations that occurred in a previous ownership is allowable so long as the property was in a usable state when acquired.