I have a new client who's income is generated from 2 unfurnished properties. After looking at the previous set of accounts from the other accountant he claimed the wear & tear allowance, which I thought was only on furnished homes or furnished holiday lettings. I have been given a pile of expenses from the client for repairing and renewing items in the homes, new carpet, polished wooden floor, door mat, fridge freezer, tiled bathroom, repaired roof tiles, new kitchen table..........I assume I put these through as basic expenses as they are repairs and renewals, I then have receipts for replacing old central heating system, fit extractor fan etc will this also be a repair and renewal?? and I then claim 10% wear & tear on the income. This is my first client with property income and I am getting a little confused with the wear & tear allowance and would appreciate any guidance as to what I claim and what comes under the wear & tear allowance
I know the wear & tear allowance is 10% of the income less rates and water and I think is instead of claiming capital allowances on any new items that are not replacing items etc to their original condition so instead of including them and using the AIA like on plant & machinery it is covered in the wear & tear allowance....so confused
This is my first client that I have had with property income so please be gentle
I also have a question regarding solar panels but I will start a new topic.
You cannot claim Wear & Tear allowance on an unfurnished property at all.
The repairs are allowable so long as they are 'like for like' items and not replaced with a superior or fancier item. Most of those items you have listed do appear to be repairs and renewals, unless they are major changes to the property which would not be allowable, such as building an extension or fitting double glazed windows when single panes were there originally.
I'd suggest talking this over with an accountant or taking up some research on 'land and property income' before going into it. It is an area where mistakes can easily be made if you've not looked into the area before hand. Trust me on this one.
You cannot claim Wear & Tear allowance on an unfurnished property at all.
The repairs are allowable so long as they are 'like for like' items and not replaced with a superior or fancier item. Most of those items you have listed do appear to be repairs and renewals, unless they are major changes to the property which would not be allowable, such as building an extension or fitting double glazed windows when single panes were there originally.
I'd suggest talking this over with an accountant or taking up some research on 'land and property income' before going into it. It is an area where mistakes can easily be made if you've not looked into the area before hand. Trust me on this one.
G
That's what I thought but the previous accountant has claimed it in the past accounts, this is why I'm getting confused.
I also have an unfurnished property that I rent out and am under the impression that W&T allowance is not claimable. Neither is any capital expenditure. I am not sure about replacing capital otems such as a central heating boiler or carpets. I would be very interested in knowing what you find out.
Apparently you can only claim capital allowance on lettings that are treated as a trade (hotels, B&Bs, furnished holiday lettings, guest houses etc.). Any enhancements to the property are kept on a fixed asset register and can be claimed when selling the property.
I have been told that anything that is being replaced or repaired that is part of the building or on what you would expect to be in a rented property i.e a boiler, carpets etc and being replaced on a like for like can be claimed as a business expense against the rent receivable. Although some are arguing if a fridge freezer is a business expense even if its been replaced on a like for like basis as you wouldn't expect that to be provided even though it originally was....... so I'm not too sure on that yet.
I understand the wear & tear allowance is only allowed if the property is fully furnished and the client only needs to move in with a suitcase full of clothes.........so everything is supplied right down to the cutlery etc.
This is my first rented property client so if anyone else can add to this please do
Hi Lisa, thanks for the reply and sorry for the delay in getting back to you. I have spoken to a few people about what can be claimed as an expense or capital item and the answer is, usually, 'it depends'.
