The answer to this question is that it depends what your legal expenses relate to. So let us cover a few examples in our article today.
Generally, legal fees are capital if they relate to a capital matter, such as the purchase of a property. Therefore costs incurred in respect of acquiring, adding to or selling an asset are normally capital.
For example, fees paid to a surveyor/valuer, planning permission or registration of title on a property purchase would be considered capital expenditure.
The incidental costs of obtaining finance that is wholly and exclusively incurred for the purpose of acquiring the property are normally allowable, but may when beneficial be added to the purchase cost rather than set against rental income. However, we find that it is more usual to set them against the rental income to reduce any income tax that may be payable.
April 10th, 2018