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What Can I Offset Against Income?

Question
I have just visited my accountant about my tax position on two recently acquired houses with multiple occupation (HMO)s. When I asked about what I could offset against income I was told that all I could use was 10% of gross rentals. I mentioned about HMOs and the capital allowance but he didn't seem au fait with this. How does one going about claiming this as part of my tax assessment? My properties are not within a company.

Arthur Weller Replies:

According to Revenue & Customs Brief 45/10, the communal kitchen and lounge in an HMO are now considered to be dwelling areas, but the common parts of the building block (such as the common entrance lobby, stairs or lift) are not classed as dwelling areas. For dwelling areas, the landlord can only claim (in the case of fully furnished accommodation) the 10% wear and tear allowance, (or alternatively 'renewals'). So it may be that your accountant is not so far off the mark.

Property Tax Insider This sample question and answer is taken from Property Tax Insider, a monthly UK tax saving magazine for landlords and property investors.

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