Sorry if I'm confusing things but there have been so many posts on this recently that I'm seeking clarity. There has also been the problem that revenue never give a definitive list, for example debates about whether new double glazed windows is a capital enhancement expenditure or a replacement of old windows which should be allowed under repairs and replacement. Can anyone see if they disagree with the following lists
1. Wear and Tear allowance
12.5 % deduction over 8 years
Cooker, washing machine, hoover
Carpets
Curtains
Furniture
Central heating system
Kitchen
2. Repairs and replacement
can be deduced from rental income 100%
parts & labour of washing machine repair
service central heating, put in new valve
fix broken window pane/frame
replacing roof tiles or roof repairs
retiling bathroom where tiles are beyond repair
service alarm system/smoke alarm
Capital Enhancement Expenditure - can not be deducted but may be used if the house is sold for Capital Gains Tax reduction
Plumber fixing things
Electrician fixing things
Changing locks
Key cutting
3. Capital expenditure
that would be consider an enhancement and will be allowed to reduce Capital Gains Tax Liability if the property is sold.
New windows
Completely new roof - say replacing felt with pitched roof
Converting property into more units, Converting garage into flat
Installing new bathroom
Generally to figure out if it's an enhancement it would be considered so if it was to increase the value of the property.
It's not always easy to decide under which category an expenditure should go. Two personal examples
1. I put in double glazed windows about 15 years ago in a property where the wooden windows were gone rotton and beyond repair (who fixes these windows anyway) and just wrote off the cost on my tax return with a note to revenue and heard nothing back but now my thinking is that really it's an enhancement expenditure and currently I'm replacing old windows with double glazing so I'm guessing it's
2. Last xmas a long term tenant left and the bathroom tiles (about 10 years old) were beyond fixing (there's more to life than cleaning and cillit bang only goes so far) also you can't really just fix around just the bath area so I completely replace the whole bathroom to last another 10/15years. I would consider this a repair and replacement but I also replace the lino in the kitchen and the carpet in the hall with tiles as it's more modern and hard wearing but really it doesn't add anything to the value of the property so would this be wear and tear.
I appreciate anyone who has comments on the this and the lists, I'll put them up in the key posts on rental if I get a clearer picture.
1. Wear and Tear allowance
12.5 % deduction over 8 years
Cooker, washing machine, hoover
Carpets
Curtains
Furniture
Central heating system
Kitchen
2. Repairs and replacement
can be deduced from rental income 100%
parts & labour of washing machine repair
service central heating, put in new valve
fix broken window pane/frame
replacing roof tiles or roof repairs
retiling bathroom where tiles are beyond repair
service alarm system/smoke alarm
Capital Enhancement Expenditure - can not be deducted but may be used if the house is sold for Capital Gains Tax reduction
Plumber fixing things
Electrician fixing things
Changing locks
Key cutting
3. Capital expenditure
that would be consider an enhancement and will be allowed to reduce Capital Gains Tax Liability if the property is sold.
New windows
Completely new roof - say replacing felt with pitched roof
Converting property into more units, Converting garage into flat
Installing new bathroom
Generally to figure out if it's an enhancement it would be considered so if it was to increase the value of the property.
It's not always easy to decide under which category an expenditure should go. Two personal examples
1. I put in double glazed windows about 15 years ago in a property where the wooden windows were gone rotton and beyond repair (who fixes these windows anyway) and just wrote off the cost on my tax return with a note to revenue and heard nothing back but now my thinking is that really it's an enhancement expenditure and currently I'm replacing old windows with double glazing so I'm guessing it's
2. Last xmas a long term tenant left and the bathroom tiles (about 10 years old) were beyond fixing (there's more to life than cleaning and cillit bang only goes so far) also you can't really just fix around just the bath area so I completely replace the whole bathroom to last another 10/15years. I would consider this a repair and replacement but I also replace the lino in the kitchen and the carpet in the hall with tiles as it's more modern and hard wearing but really it doesn't add anything to the value of the property so would this be wear and tear.
I appreciate anyone who has comments on the this and the lists, I'll put them up in the key posts on rental if I get a clearer picture.