Update for Landlords

Landlords

Landlords need to be aware of the new rules affecting the way in which costs for wear and tear can be claimed. Historically, landlords of furnished properties could deduct 10% of their rent from their profit to account for wear and tear, even when absolutely no work had been carried out.

As from April 2016, the system has changed and the new rules will apply to landlords of unfurnished, part furnished and furnished properties. Tax relief will now only be available on the actual cost of work done and replacement of ‘moveable items’. The initial cost of purchasing furniture is not allowable, but the replacement cost is.

The new relief will cover the capital cost of replacing items provided for the tenant’s use in the property, such as:

  • moveable furniture or furnishings, e.g. beds or suites;
  • televisions;
  • fridges and freezers;
  • carpets and floor coverings;
  • curtains;
  • linen;
  • crockery or cutlery; and
  • other furniture.

Fixtures integral to the building, such as baths, fitted kitchen units and boilers are not included as they are deductible as a repair to the property itself.  

The above will not apply to furnished holiday letting businesses and letting of commercial properties, because these businesses receive relief through the capital allowances regime.

For further advice on the taxation of property issues, contact your local Lentells office.