Capital Allowance - Rental income

I don't think a central heating system could be classified as a fixture or fitting for capital allowance purposes.

It is enhancement expenditure IMO as it adds value to the property on a sale and also it cannot be removed without damaging the property.
 
I would also consider the installation of a new kitchen and a new bathroom as enhancement as they increase the value of the property in question

eg - a new living room suite would not increase the value of a property as it can be removed without changing the property itself
 
DB74 said:
I don't think a central heating system could be classified as a fixture or fitting for capital allowance purposes.

It is enhancement expenditure IMO as it adds value to the property on a sale and also it cannot be removed without damaging the property.
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I would agree that a CH system is part of the fabric of a property and should not be treated in the same way as a dining suite or a double bed.

But, to my surprise, the Revenue Commissioners say otherwise. See http://www.revenue.ie/en/tax/it/leaflets/it70.html#section3. It mentions among allowable expenses: "Wear and Tear on furniture and fittings, e.g. carpets, cookers, central heating etc." (my emphasis).
 
I stand corrected [shakes head in disbelief]

Sure you could justify near enough everything as F&F if Revenue state that you can claim Capital Allowances on a central heating system
 
Padraigb said:
I would agree that a CH system is part of the fabric of a property and should not be treated in the same way as a dining suite or a double bed.

But, to my surprise, the Revenue Commissioners say otherwise. See http://www.revenue.ie/en/tax/it/leaflets/it70.html#section3. It mentions among allowable expenses: "Wear and Tear on furniture and fittings, e.g. carpets, cookers, central heating etc." (my emphasis).
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I wouldnt place much emphasis on this. Revenue guides are always subject to 'errors & omissions excepted'-type disclaimers
 
This area is open to some interpretation. Heating systems in industrial buildings may be allowable as part of "plant" and CA claimed. You also have CA on hotels and nursing homes so such "fixture" may come under CA there.

However generally, apart from the specified industrial and other buildings on which CA can be claimed, fixtures would not normally be allowable. Fixtures can be generally defined as those goods which have become attached to the buildings in such a way that they cannot be removed without substantial damage being caused to the goods themselves or to the building to which they are attached. Heating systems would normally be classed as a fixture. Think, would you take the radiators & boiler with you when moving ???. Examples :-
Floor covering stuck down e.g. tiles.
Immersion heaters
Central Heating Systems
Baths
Electrical wiring including lampholders and fuse boards


Fittings on the other hand, are those goods, which though often attached to buildings, can be removed without substantial damage being caused to the goods or the building. Examples :-
Blinds
Carpets
Cookers & other appliances
Fitted carpets & lino other than that stuck down over its entire surface

It is sometimes possible to claim CA for fixtures and class them as "plant" if it has an"active function" in the trade. An example would be a petrol station forecourt canopy. Might seem to be part of the structure or "setting" but the Irish courts have held that it is plant.

Returning to the central heating, in an ordinary rental property or other normal trading business, I would not consider that heating systems would qualify as plant for CA purposes.
 
I agree. A domestic central heating system should not be eligible for capital allowances.
 
I have followed this thread through but I don't believe my confusion regarding capital allowances has been answered so here goes if anyone can help.

I bought and lived in a house for about 7 or 8 years. I then moved on to another house but rented out the original property.

Obviously for me to live in the house initially I bought lots of fittings e.g. table and chairs, fridge, oven, beds etc. I simply left most of those items in place when I rented the house.

As far as I know I am allowed to place a value on all those items at the time of the first letting and then depreciate this amount over the next 8 years.

Am I correct? And if so how do I arrive at the value e.g. for an 8 year old washing machine?

Example I bought a washing machine say in 1998 for € 350. What value can I place on it for a Capital allowance in say Jan 2006?
 
You will have to attempt to value all of these items and then claim 12.5% of this value each year for 8 years.

Basically you have to ask yourself how much is the eg washing machine worth in 2006?

It's going to be very small though if you are realistic about it.
 
Do Revenue give any guidelines at all on how to do this.
E.g.1 - The table and chairs is in perfect condition I could argue it has 80% on original value and that it would certainly cost that to replace it.
E.g.2 - I agree an old appliance will have a certain lifespan so maybe they can only be deemed to have 10% or 20% of their original value.

Can I use this kind of logic, unless as I say there are official guidelines.
 
I'm not aware of any official guidelines so you just have to use your best estimates

Bear in mind that the 12.5% Capital Allowance rate would indicate that Revenue consider that all assets to be effectively worthless after 8 years so arguing that a table & chairs is worth 80% of what you paid for it 10 years ago might not impress a Revenue auditor.
 
kfpg said:
I bought and lived in a house for about 7 or 8 years. I then moved on to another house but rented out the original property.

Obviously for me to live in the house initially I bought lots of fittings e.g. table and chairs, fridge, oven, beds etc. I simply left most of those items in place when I rented the house.

As far as I know I am allowed to place a value on all those items at the time of the first letting and then depreciate this amount over the next 8 years.
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Can anyone confirm that this is definitely allowed in cases like this, given that these expenses were incurred prior to the to the property becoming a rental property.





What expenses cannot be claimed for?
  • Pre-letting expenses, i.e. expenses incurred prior to the date on which the premises was first let apart from auctioneer's letting fees, advertising fees and legal expenses incurred on first lettings.
http://www.revenue.ie/en/tax/it/leaflets/it70.html#section5
 
I think that furniture and fittings are treated differently to general expenses i.e. as capital allowances which has a different section on the return forms - but I'm not an expert and open to correction
 
twofor1 said:
Can anyone confirm that this is definitely allowed in cases like this, given that these expenses were incurred prior to the to the property becoming a rental property.





What expenses cannot be claimed for?
  • Pre-letting expenses, i.e. expenses incurred prior to the date on which the premises was first let apart from auctioneer's letting fees, advertising fees and legal expenses incurred on first lettings.
http://www.revenue.ie/en/tax/it/leaflets/it70.html#section5
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What they are getting at here are items such as repairs or other similar costs AND interest on loans/mortgages prior to the first letting. Capital expenditure ( fridge/cooker) is not the same as ordinary revenue related expenditure ( paint, replacement lightbulbs) . If someone is going to let a house, furnished then obviously they have to purchase and fit the house out before the letting. Furniture & equipment purchased before the letting and then put in use for that letting are allowed at 12.5% straight line for 8 years as mentioned earlier in the thread.
 
Capital Allowances

Central Heating forms part of the Fixtures and Fittings as far as capital allowances go if you're claiming for the building itself.

In relation to the question about calculation, search Google for "property capital allowance indicative savings'
 
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