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Question Title: Furnished tax relief
| Question: 394 |
| We have always claimed the 10% tax deduction for wear and tear under the special Inland Revenue concession for furnished rental property. However, over the years, we have steadily been reducing the amount of furniture supplied with our property until this year when we finally removed all beds, wardrobes and the living room furniture leaving the property with simply carpets, curtains and the usual kitchen white goods/appliances. What is the tax position in this situation.
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| Answer: |
| Due to increasing safety legislation in recent years, it is becoming a common trend for landlords to provide only minimal furnishings in many lettings whereas, only 10 years ago, the majority of private sector shorthold lettings were furnished. But, by removing furniture such as beds, tables and chairs, the landlord will no longer qualify for the 10% 'furnished property' tax allowance. According to Inland Revenue documentation, the taxman takes the view that: 'For a property to be classed as a furnished letting, there must be a reasonable degree of comfort available to the Tenant when he or she moves in. Furniture such as beds, tables, chairs and so on must be provided as well as cooking facilities.' Therefore, by removing the beds and the living room furniture, it is unlikely that you can properly be entitled to the furnished property deduction. Instead, you are permitted to claim for any replacement costs as they occur. There are, however, other tax advantages to keeping the property unfurnished - full exemption from council tax for empty property is only available (up to six months) on unfurnished dwellings.
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References:
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Pages:
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Hyperlinks:
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Letting Handbook |
Chapter 14 |
letting-handbook-and-factsheets.html
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