Expenses you can claim if your property is fully furnished – to 5 April 2016
If the property you let out is fully furnished, you can claim a wear and tear allowance. A fully furnished property is one let with enough furniture, furnishings and equipment for normal residential use.
Wear and tear allowance isn’t available for Income Tax purposes from 6 April 2016. You may be able to claim Replacement Domestic Item relief instead.
The wear and tear allowance is 10% of the net rent.
The net rent is rental income less any costs you pay that a tenant would usually pay, such as council tax or utility bills like gas, water, and electricity.
The 10% wear and tear allowance covers things like:
· movable furniture or furnishings, such as beds or sofas
· televisions
· fridges, freezers, and other white goods
· carpets and floor-coverings
· curtains
· linen
· crockery or cutlery
· tables and other similar furniture
If you do claim the 10% wear and tear allowance, then you can’t claim the cost of repairing furniture and equipment covered by the allowance or for renewing small items such as broken crockery or missing cutlery.
If you’re sub-letting the property from another landlord, the wear and tear allowance can only be claimed by the landlord that furnished the property. If you didn’t provide the furniture you can’t claim the wear and tear allowance.
Expenses you can claim for replacement of domestic items – from 6 April 2016
If you let out residential property (a dwelling house) you may be able to claim a deduction for the cost of replacing domestic items such as:
· movable furniture for example beds, free-standing wardrobes
· furnishings for example curtains, linens, carpets, floor coverings
· household appliances for example televisions, fridges, freezers
· kitchenware for example crockery, cutlery
Replacement of Domestic Items relief is only available for expenses incurred from 6 April 2016 for Income Tax purposes.
Unlike the Wear and Tear allowance, for the Replacement of Domestic Items relief to apply the dwelling house can be unfurnished, part furnished or fully furnished. However, an expense must actually be incurred on purchasing a replacement domestic item, ‘the new item’.
The new item must also be solely provided for use by the tenants in a dwelling house and the old item must no longer be available for use in that dwelling house.
The initial cost of purchasing domestic items for a dwelling house isn’t a deductible expense so no relief is available for these costs. Relief is only available for the replacement item