Claiming Capital Allowance on Property Rentals

Unlocking Tax Benefits: Can You Claim Capital Allowances on Residential Property You Rent Out?

When it comes to tax benefits for rental properties, many landlords wonder if they can claim capital allowances on residential properties they rent out. While capital allowances primarily apply to commercial properties, there are certain scenarios where residential landlords may be eligible for these tax reliefs. At Complete Capital Allowance we can help you claim the tax reliefs you are entitled to.

1. Furnished Holiday Lettings (FHLs)

Suppose you rent out a residential property as a furnished holiday let (FHL). In that case, you may be able to claim capital allowances from HMRC on certain items of furniture, fixtures, and equipment used in your holiday letting business. This can include items such as furniture, appliances, and furnishings that are essential for the operation of your holiday let. This also includes fitted kitchens and bathrooms, heating and cooling installations, carpets and repairs.

2. Mixed-Use Properties

In cases where a property is used for both residential and commercial purposes, such as a building with a residential unit and a commercial unit, capital allowances may be claimed on the commercial portion of the property. However, it’s important to note that the residential portion of the property typically does not qualify for capital allowances. So, if you have a property such as a flat above a shop, you can claim capital allowances on the shop proportion of the building.

3. Renovations or Conversions

Suppose you undertake renovations or conversions on a residential property to convert it into a commercial property, such as transforming a residential property into serviced apartments or student accommodation. In that case, you may be eligible to claim capital allowances on qualifying expenditures related to the commercial elements of the project.

4. Common Areas in Residential Developments

In some cases, capital allowances may be available for common areas or shared facilities within residential developments. This could include communal heating systems, lifts, lighting, and other amenities that meet the criteria for capital allowance eligibility.

While these opportunities exist, wading through the complexities of capital allowances for residential rental properties can be challenging. That’s why at Complete Capital Allowance, we have an expert team waiting to take your enquiry and navigate you through the process.

Conclusion

While capital allowances primarily apply to commercial properties, there are instances where residential landlords may be able to claim these tax reliefs. Whether it’s through furnished holiday lettings, mixed-use properties, renovations, or common areas in residential developments, exploring these opportunities can help landlords optimise their tax position and maximise their returns.

If you’re a residential landlord unsure about capital allowances for your rental properties, get in contact with Complete Capital Allowance today.