Why it might pay to furnish your buy-to-let property

Posted on in Income Tax

When you spend money on your buy-to-let property, you expect to get a tax deduction against the rents received to help keep your tax bill down.

For those with children, this is even more important if your rented property might take you into the 'no-go' £50,000 - £60,000 income level where child benefit might be reduced or taken away completely.

With residential properties, costs like agent's fees and gas certificates are easily deductible. But what about the costs of white goods and furniture?

The usual (now very valuable) capital allowances for trades, aren't available for residential properties. Therefore, instead, before April 2013, there was a useful 'non-statutory' relief that allowed you to claim the cost of say replacing a cooker (the original cost can't be claimed). This relief has now been taken away.

What remains is, instead, claiming a 10% Wear & Tear allowance based on 10% of the rent due on your property. However, this only applies to furnished properties. Furnished means the sort of things you'd expect to see in a home such as a bed, sofa, dining table and chairs.

With the availability of cheap furniture, you might find this is an investment worth making. You'd get tax relief for replacing white goods in the future. Of course, if the furniture itself gets damaged, you'd need to include its replacement cost within the 10% claim.

As the Wear & Tear allowance is based on rent due, you can see that this is more of a possibility in higher rent areas.