Rental income - wear & tear query

[panindub]

Hi all,

Just wonder how do you handle a situation like this;

- your claim 12.5% wear & tear per year on €400 fidge starting for 2011 = €50 per yr over 8 yrs
- Your fidge breaks down and has to be replaced with new one in 2012.

Do you put cost down as a repair? Or do you lose fidge existing value of wear & tear(€350) and write value of new fidge(€500) off for a further 8 yrs?

Thanks in advance

 

[mandelbrot]

When you dispose of an asset (be it by way of sale or through obsolescence) you have to calculate a balancing allowance / charge.

So in your case the fridge has a "tax written down value" of €350, and on disposal of it you received (presumably) Zero for it - your balancing allowance is €350 (this is an additional wear & tear allowance in the year of disposal).

The new fridge has nothing to do with the old one, you have acquired a new asset and it attracts wear & tear in the normal way.