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Furbishing your rental property – Any benefits to this?

As with all things in life….nothing lasts forever. So, unfortunately for landlords, they will have to replace items or refurbish their property.

Is there any benefit besides having an improved rental property?

Simply, Yes.

The costs you will incur come under this simple Rule of thumb – if it’s incurred wholly and exclusively for the purpose of earning the rent, then it’s a tax deductible cost.

These allowable items (e.g. install new boiler, refurbish bathroom, etc.) are taken as a deduction over 8 years against the net rental income.

If you have taken a loan out to carry out the refurbishment, then the interest on this loan is also tax deductible.

If the costs are repairs more so than refurbishments, then these are allowable in the year that they occur.


Capital Allowances

When you bought your investment property, you would have purchased appliances and furniture to fit out the investment property.

These costs are known as “Capital Costs”. These amounts are deducted against your rental income over a period of a number of years, the term used to describe these are “Capital Allowances”.

These are very valuable and assist in reducing your taxes due from your rental property. Hence, always keep a list of appliances & furniture along with the costs.