In recent years there have been a number of changes to the rules governing what expenses/allowances are allowable for buy-to-let landlords when furnishing/repairing a property. It is important to be aware of what can and can’t be claimed so that you don’t lose out.
Historically, buy-to-let landlords have been able to opt for either a “wear and tear allowance” or, by HMRC concession, the “renewals basis”.
From 6 April 2016, the Wear and Tear Allowance and the renewals allowance will be replaced by a NEW relief which allows all landlords (including unfurnished, part furnished and fully furnished) to deduct the costs of replacement furnishings in a property. The relief will NOT be available for the initial cost of furnishing the property. The new relief will cover the capital costs of replacing items such as:
Fixtures integral to the building, such as baths, fitted kitchen units and boilers which are not normally removed by the owner when the property is sold are NOT included. However, the replacement cost of such items would normally be a deductible expenses as a repair to the property itself. General repairs such as painting will still be allowed as a deduction from rental profits. Landlords who typically have low repairs and maintenance costs who will have benefited from the 10% wear and tear allowance may find that this change increases their tax.
If you have any queries regarding any of the above do not hesitate to contact your normal Forbes Dawson contact.
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