# rental income tax and capital allowances



## dcostigan (3 Nov 2012)

Hi all

Can someone clarify the following (which has me incredibly confused as I get different answers depending who i ask!)

I bought my apartment in 2005. I live there for 5 years and then I moved in with girlfriend (now wife) So I've been renting it out since October 2010. 

Can I claim capital allowances on things like carpets, curtains, furniture etc that I bought when I initially moved in (in 2005) on rental income earned since I started renting it out. One accountant is saying you can't claim on pre-letting expenses but surely capital allowances is different since you kit out a house / apartment before you start renting it

Any help would be much appreciated
David


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## mandelbrot (3 Nov 2012)

I'll quote myself from a previous thread on this topic:
http://www.askaboutmoney.com/showthread.php?t=171272&page=3


mandelbrot said:


> Wear & tear allowances under S.284 are  only ever granted on the basis of the actual cost of the asset in  question - S.284(2)(ad) _"Where capital  expenditure is incurred on or after 4 December 2002 on the provision of  machinery or plant a wear and tear allowance for a chargeable period  will be of an amount equal to 12.5 per cent of the actual cost of the  machinery or plant"_
> 
> I think we had a thread on here before about the allowability or  otherwise of capital allowances on fixtures & fittings in houses  that were originally PPRs and subsequently become rental properties.  S.284(6) & (7) state
> _"Wear and tear  allowances are also available in respect of capital expenditure incurred  on fixtures and fittings (for example, furniture, kitchen appliances,  etc) provided by a lessor for the purposes of furnishing rented  residential accommodation. The allowances are available only where  the expenditure is incurred wholly and exclusively in respect of a house  used solely as a dwelling which is, or is to be, let as a furnished  house on bona fide commercial terms in the open market."_​
> ...




Essentially, you need to:


 work out the cost of all the capital items of furniture & fittings (note, only things that don't become fixed to the structure of the house in such a way that they can't be easily removed without damaging the item or the house).
establish the cost of each item, and the year acquired.
each item has an 8 year tax-life, so you reduce it's cost by 12.5% for each year owned until after 8 years it is written down to nil.
In 2010 the sum of the 12.5% on each of these items will be your wear & tear claim for the year.


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