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unfurnished or furnished?

Property rental of a flat.

There is an annual maintenance charge of £1000 per year for communal area and grounds which has to be paid.

Can this be deducted from the taxable profit?

Is it more profitable to let furnished? If the flat is let furnished you claim 10% wear and tear. If its let furnished what can you claim? The flat contains white goods but currently no other furnishings.

Can white goods count as part furjushed? And would this allow 10% w&t to be claimed?

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10th Dec 2012 10:37

Letting expenses

Yes - you can claim service charges paid for the letting property.

More profitable?  Ask a letting agent what additional rent you could achieve for a furnished flat.

If it is furnished, you can claim 10% of the rent (less any council tax) as wear and tear against replacement of the furnishings, but you don't have to.  You could claim the cost of replacements as you would for an unfurnished flat.

There is no such thing as part-furnished for tax purposes.  White goods alone do not constitute a furnished flat.  It must have sufficient beds, tables and chairs, plus a fully equipped kitchen, to enable a tenant to move in and live there without any additional expenses on the tenant's part.

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By cfield
10th Dec 2012 11:05

Don't forget the legal implications

Some letting agencies warn landlords that furnished lettings could expose them to possible legal action in respect of those furnishings. I've always thought that was a bit over the top, but I suppose it's worth thinking about with so many no win no fee legal claims these days.

I guess it boils down to additional rent less additional cost. You might attract a better class of tenant with unfurnished as they are less likely to trash their own furniture.

Don't think there is actually a statutory definition of what constitutes a furnished property, nor indeed any case law or tribunal decisions, but I would agree with Euan that there should be beds, furniture and kitchen equipment, plus carpets and curtains, as a bare minimum.

You might be able to do without a table. Most people eat in front of the TV anyway these days.

Tax wise, you can either claim the 10% or replacement costs on the renewals basis on a furnished flat. The 10% is usually better, but if you go for the renewals remember you cannot claim anything for the original items.

If you go for furnished, don't forget to ask for a deposit to cover damage.

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By ACDWebb
10th Dec 2012 12:25

Furnished

is now defined by s308B(2)(b) as:

"furniture, furnishings and equipment, together with any furniture, furnishings and equipment in the dwelling-house at that time provided by a superior landlord of P, is sufficient for normal residential use"

PIM3200 says:

"[But] the deduction is only due if furnished accommodation is genuinely provided. A furnished property is one that is capable of normal occupation without the tenant having to provide their own beds, chairs, tables, sofas and other furnishings, cooker etc. The provision of nominal furnishings will not meet this requirement. If the accommodation isn't furnished, or only partly furnished, the 10% wear and tear allowance isn't due."

As for Service Charges they should be allowable, but possibly watch for inclusion of large contributions to "Sinking Funds" against future capital projects.

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