Furnished v Unfurnished – which is best for your property letting portfolio?
For those of you with unfurnished rental properties, the disappointment of not being able to claim the 10% wear and tear allowance that your fellow “property investors” who let their properties as furnished are able to, could be solved by a few small changes.In previous years the rules for furnished property lets had a clause geared around the need to continually replace property items in order to comply with regulations. This made the appeal of having furnished property lettings more of a hassle than a benefit, even with the tax deduction. However, as this regulation ceased in April 2013, it is now worth considering again. HMRC guidelines suggest that a property can be classified as furnished, if it contains some furniture, furnishings and equipment for normal residential use. It is no more specific than that, so by including “some”, but not necessarily a comprehensive list of “furnishings” or items could mean that you can benefit from deducting 10% of the rental income received from your rental profits, on an annual basis, with just a small up-front investment to kit the place(s) out. As always, it is best to have a word with your accountant to ensure you are playing fair with HMRC, but for anyone with a large property portfolio, this could be an added bonus and a simple way of saving a bit of tax.