I lived in my flat for a few years, and then when I moved out, I rented it out. When I put the property on the market my tenant moved out and I didn't put it back on the rental market due to the imminent sale. I had several buyers pull out, and ended up having the property empty for two years in total before completing and paying all the associated costs (council tax, insurance, utilities, parking permit etc.). I did not re-market it for letting, as during that two-year period I nearly always had an offer on the property and constantly thought I was about to exchange on the property. Are any of these costs tax deductible? 

Arthur Weller replies:
See HMRC’s Property Income manual at www.gov.uk/hmrcinternal-manuals/property-income-manual/pim2052 regarding interest being an allowable expense. It states: ‘You don’t have to split the interest if the customer is genuinely trying to let the property, but it is empty because they have not been able to find a tenant. In this case, the interest will meet the ‘wholly and exclusively’ test. It won’t meet thistest if they have not been trying to let the property.’ So, it seems that from the time that you stopped trying to rent out the property the expenses became non-allowable.