Capital Allowances on rental income

iarann

Hi,

( I think) I understand that Capital Allowances are a mechanism to time delay capital expenditure and allow these against rental income. Assuming a house that is rented and the tenants move out, during the time before another tenant moves in repairs/upgrades usually occur, so my questions are:

1) What determines the cut off on capital items. I would usually replace all crockery in the house, and depending on condition; the toaster, kettle, vacume cleaner etc. But are these expenses (for current year) rather than capital expenses
2) Can upgrades such as double glazing, insulation etc be put in as capital allowances. Are there any limits beyond the 12.5%
3) Is it usual to have many different capital allowances at the same time, eg in 2009 to have allowances from 06,07,08 and 09.

maddogcollins

1) What determines the cut off on capital items. I would usually replace all crockery in the house, and depending on condition; the toaster, kettle, vacume cleaner etc. But are these expenses (for current year) rather than capital expenses?

Capital items are normally items that have a use beyond the current tax year. If you intend to leave the vacume cleaner etc in the house (and would expect it to last) longer than one year then it will qualify as capital expenditure and qualify for capital allowances.

2) Can upgrades such as double glazing, insulation etc be put in as capital allowances. Are there any limits beyond the 12.5% ?

Any item that adds value to a fixed asset can be claimed in capital allowances. So yes, double glazing upgrades can be claimed as they are adding value and expected to last longer than one year. No other limites except the 12.5%.


3) Is it usual to have many different capital allowances at the same time, eg in 2009 to have allowances from 06,07,08 and 09.

Yes it is perfectly normal to have many different capital allowances at one time. In my opinion the easiest way to keep track is to have an excel sheet (or a plain piece of paper) and keep track of the allowances. This would include the year it was purchased, the current capital allowance, the TWDV (tax written down value). If you would like an excel pro-forma PM me your email address and ill send one on.

On a side note..Keep all receipts as you never know when you may be revenue audited!

All of the above is open to correction but i think its pretty accurate.

iarann

maddogcollins wrote: »

All of the above is open to correction but i think its pretty accurate.

MadDogCollins,

Thanks for the reply and the info. I hear you on the receipts.

J

emmetfahy

Hello everyone,
I bought a house in 2003 adn lived in it until end of 2008. I've since moved out and am renting it out. Can I claim any of the furnature that was in the house under the capital allowances system? i.e. I moved out and left most of the furnature (couch, beds etc there).
Also, I heard that all you have to do is use the contents insurance figure as the one to calculate the deductions. Is this the case?