The purchase of wardrobes may or may not be an allowed expense for property income, depending on the type of expense and the nature of the wardrobe in relation to the rental property. Here’s how it generally breaks down:
- Capital Expenditure (Not Deductible):
- If you are purchasing a wardrobe as part of a capital improvement to the property (e.g., adding fitted wardrobes to a bedroom or making significant alterations to the property), this would typically be considered a capital expense. Capital expenditures are generally not deductible against rental income. However, you may be able to claim capital allowances or deduct the cost through depreciation over several years.
- Replacement or Repair (Deductible):
- If the wardrobe is a replacement for an existing item in a furnished or partially furnished rental property, and it’s a like-for-like replacement or a modest upgrade, then it is typically treated as a revenue expense, which is deductible against property income. For example, replacing a broken wardrobe with a new one could be classified as a repair or maintenance expense.
- Furnishing a Furnished Rental Property (Possibly Deductible):
- If the wardrobe is part of furnishing a rental property that is let as a furnished rental, you may be able to claim the cost of the wardrobe as part of your allowable expenses for furnishings. In some tax systems (e.g., in the UK), there may be a Replacement of Domestic Items Relief, which allows landlords to claim the cost of replacing furniture, appliances, and other items provided for the tenant’s use in a furnished property.
It’s important to keep records of all such purchases and consult specific tax guidelines (or a tax advisor) in your jurisdiction to ensure compliance with local property income tax rules. In the UK, for instance, HMRC provides clear guidelines on what constitutes allowable expenses for landlords.