Switching between 10% Wear & Tear Allowance and 'Renewals'
Question I currently own a fully furnished property in my own name and am claiming the 10% Wear & Tear Allowance.
I know that I can not switch to the 'renewals' basis method if the property stays in my own name. However if I change the ownership method (i.e. make my husband a partner) then can I change to the 'renewals' basis method?
This is a difficult question to answer. IR 150 (para 365) says:
"Whatever basis is chosen must be followed consistently. It isn't possible to chop and change between the wear and tear allowance and the renewals allowance from year to year".
This wording would seem to imply to me that it is possible to change, at least once.
Careful consideration needs to be made when considering whether to use the 10% wear & Tear allowance or the 'renewals' basis method.
This is because each has its own benefits and is more suited to particular scenarios. The benefit and drawbacks of both methods is discussed in the guide Pay Less Property Tax.
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