Broken fridge-freezer: is cost tax-deductible?

[GJMSurrey]

Silly question I know.

If a Fridger Freezer (or anything for that matter) breaks (not wear and tear) and a new one is purchased is this rental income tax deductable.

I could not remember if an HMO maked a difference with the item being in a communal area rather than let room etc...

Thank you

[mind the gap]

Silly question I know.

If a Fridger Freezer (or anything for that matter) breaks (not wear and tear) and a new one is purchased is this rental income tax deductable.

I could not remember if an HMO maked a difference with the item being in a communal area rather than let room etc...

Thank you

in principle, if you are already claiming the 10% wear and tear allowance every year, then you cannot claim for the f/f again under something else. I think it still counts as 'replacing' the item, regardless of how it came to grief.

The '10% method' is usually the most financially prudent way to proceed with an HMO as 10% of a high rent is better than claiming piecemeal for individual items (which might add up to less).

[GJMSurrey]

Okay this sounds logical.

But in terms of overall exposure and decided whetehr to go for the 10% allowance or not (I know you cannot change afterwards) if say a piece of furniture (or anything) was a couple of months old and a tenant damages it (i.e. pulls a door of a fridge or misuses/sits on a table and breaks it etc) I guess this falls outside of the W&T allowance and could be claimed?

Inquistive mind!

[mind the gap]

Okay this sounds logical.

But in terms of overall exposure and decided whetehr to go for the 10% allowance or not (I know you cannot change afterwards) if say a piece of furniture (or anything) was a couple of months old and a tenant damages it (i.e. pulls a door of a fridge or misuses/sits on a table and breaks it etc) I guess this falls outside of the W&T allowance and could be claimed?

Inquistive mind!
If a tenant damages a newish piece of furniture/equipment then you take the replacement cost out of their deposit. If it is covered by your buildings insurance, you claim on that and charge the insurance excess to the tenant.

[subjecttocontract]

I don't believe the 10% W & T allowance applies to fitted items. So, the cost of replacing a built in cooker, fridge, freezer, microwave, dishwasher etc can be claimed in addition to the 10% W & T allowance.

[mind the gap]

OP, is the fridge-freezer in question built in, or free standing?

[GJMSurrey]

Free standing, so in my case it is clear. Thanks a lot for both your comments.

Hey maybe we can screw everything to the floor haha

[Moderator1]

Less-serious posts have been moved to http://www.landlordzone.co.uk/forums/showthread.php?t=32441

[Telometer]

You raise a very good question. If this is an HMO on which you are claiming capital allowances, then the W&T allowance presumably does not cover communal areas, and capital allowances are (or AIA is) available.

[GJMSurrey]

You see, this was my thinking.

I'm letting the 'rooms' of my HMO and claim W&T.

I have claimed (or am currently claiming capital allowances tax relief through a dedicated firm), which I hope will be complete shortly.

BUt I did not how what this means for my non-screwed down items in terms of them (a) being damamges or breaking, or (b) slowly deteriorating.

Hmm

[mind the gap]

BUt I did not how what this means for my non-screwed down items in terms of them (a) being damamges or breaking, or (b) slowly deteriorating.



:DIf you are over 40 and it is parts of your body you're talking about, the answer is almost certainly 'both'.

[jeffrey]

Best not to think too much about his/her deteriorating body. Take your bromide, dear.

[Telometer]

You are entitled to a 10% W&T deduction/to use the replacement method in a furnished residential property.

The communal areas of your HMO you are treating as otherwise than a dwelling house in order to claim capital allowances. Accordingly the W&T method does not apply to communal areas as they do not constitute furnished residential property.

Therefore I believe CAs should apply.

[subjecttocontract]

Am I right in thinking that whilst the cost of replacement contents is covered by the 10% W&T allowance, the cost of repairs to the same contents can be claimed in addition to the 10% W & T allowance ?

[Phlash]

A repair is a repair and is revenue in nature and therefore deductible.

W&T allowance gives you tax relief for the initial purchase of the capital asset and subsequent repurchasing of such capital assets.

Spend money on repairs, and you get tax relief from it being deducted against rental profits. The fact that you're repairing a capital item does not matter.

The two spends (purchase and repair) are distinct and separate. One is capital and tax treatment is through W&T and one is revenue and is deductible in full.