Landlord Taxation

Landlord taxation…want to know a little more??

Posted on October 15, 2012 by Aaron

What implications are there for furnished or unfurnished properties?

If you are letting the property as a furnished residence you could be entitled to a ‘wear and tear’ allowance. There is no legal definition in tax legislation of what constitutes a furnished property, but HMRC guidance says ‘sufficient furniture must be provided for normal occupation’. In practice this means beds, chairs, tables, sofas, cupboards, cooker, fridge etc.

If this requirement is met you are entitled to a ‘wear and tear’ allowance of 10% of the gross rent (less any council tax or water rates paid) each year. HOWEVER, If you use this method you are unable to claim the cost of buying these items.

An alternative is to claim the cost of replacing these items as and when necessary. No relief is claimed for the initial purchase of items of furniture but a claim can be made for replacement when they are damaged or worn out. You must, unfortunately, stick to the method chosen, you cannot claim 10% ‘wear and tear’ allowance one year and then claim the cost of replacement the next. In practice it is usually preferable to claim the 10% if the item is likely to last more than 10 years.

If the property has no furniture, or only a few items are provided, the property will be treated as unfurnished. In these circumstances no allowance can be claimed for furniture expenditure.

For more information contact us on 01202 292400 or contact Ian Sheeky at Hugh Davis & Co Chartered Accountants who kindly supplied the information. But beware this is only a guide and please always speak to the right person before just lumping in and claiming allowances for stuff…

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