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Where Taxpayers and Advisers Meet

Property with 2nd hand Furniture

Alan
Posts:2
Joined:Wed Aug 06, 2008 3:02 pm

Postby Alan » Thu Mar 06, 2003 1:42 pm

Hi,

If I buy a property for £50K and second hand furniture from the same vendor for £2K, my understanding is that the £2K can not be offset against income tax, as the furniture has been used to get the property ready for letting.

Does this therefore mean that I can use the 10% wear and tear allowance, or the renewals method when I replace this second hand furniture.

Is this true

Alan

Nigel Lord
Posts:518
Joined:Wed Aug 06, 2008 2:18 pm

Postby Nigel Lord » Fri Mar 07, 2003 1:28 am

Alan

It is never possible to claim the full cost of purchasing furniture (new or second hand) against rental income, when a particular item has been acquired the first time

The following methods allow some level of relief:

1. Claiming 10% 'wear & tear' allowance. This is a crude calculation based on 10% of gross rents (less any service costs paid on behalf of the tenant e.g. telephone, TV licence etc.). I suspect that this method, which is the least complicated, will be most suitable in your circumstances.

2. Claiming the 'renewals basis' i.e. no relief when furniture is first purchased (at the time of purchase and thereafter) but 100% of the cost of replacing that furniture on a 'like for like' basis.

3. Capital allowances may be claimed. This is a more complex calculation where all items are a added to a pool which is depreciated at a rate of 25% pa of the written down value.

It is possible to elect which method to follow and to vary the election each year. You should take advice as this can become quite complicated.

If you require any further assistance please do not hesitate to contact us, and we will be happy to act on your behalf.

Nigel Lord
Lord Associates
Taxation & Business Consultants
102 Smarts Lane
Loughton
Essex, IG10 4BS
020 8508 1642 & 07769 931852
lordassociates@ntlworld.com


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