Question:
I am about to purchase a property. Are capital allowances claimable on a property already converted into three self-contained flats?
Arthur Weller replies:
Capital allowances are not due on the cost of houses, flats or other residential accommodation. Furthermore, plant and machinery capital allowances are not available on any furniture equipment supplied with residential furniture that is let furnished, except in the case of qualifying furnished holiday lettings (see www.gov.uk/hmrc-internal-manuals/property-income-manual/pim3020). However, there is a 'replacement of domestic items relief' potentially available for furnished lettings (see PIM3210. Additionally, there may be some scope for claiming capital allowances for expenditure on the 'common parts' of a block of flats, e.g. stairs and lifts (see: https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23060).
