10% Wear and tear Allowance on subsetting?

[sober]

10% Wear and tear Allowance on subletting?

Recently a company offered me to rent my furnished flat for slightly lower (15 to 20%) than market rent, guranteed for 12 months at a time for 3 years. They will then let it out to "professional" tennants at the market rent and manage as well, (with repairs at cost), taking on the risk of empty periods. The question is: will I be able to claim 10% W&T allowance, or should they be caliming it? and at what rent?

Thanks

[tenant29]

Its an "allowance" claimed on your tax return - not the letting company's tax return !

It is best to choose an established letting agent on the High St if you want "professional tenants" and you can vet their references before the selected tenant moves in. Letting agents based too far away from your property , do not look after your property.

[sober]

Its an "allowance" claimed on your tax return - not the letting company's tax return !

It is best to choose an established letting agent on the High St if you want "professional tenants" and you can vet their references before the selected tenant moves in. Letting agents based too far away from your property , do not look after your property.

The company is not a letting agent. They sub-let after taking properties on longer leases. The problem is I am too far from the property in question and this company is loacated closer. Since they will be letting the property out to tenants and checking the refereces, and collecting the rent; the risk is their's if the tenant does not pay. I should be getting the agreed rent on the head lease for 12 months of the year.

They will be claiming the wear and tear allowance based on the rents received for themselves. Since I am giving the property out fully funrnished, I wanted to find out if I can claim wear and tear allowance from the rent I will get.

Thanks
Regards
Sober

[Chartered Tax Adviser]

Tax is not always logical, but if you apply the logic to this one, the wear and tear allowance is due to the person wo lets the property AND owns the furniture etc.

As you probably know, you can decide at the outset whether you claim W&T or renewals. If you had chosen renewals, and you had to replace a sofa, say, who would be entitled to the renewal allowance ? You or the "company" ? In my opinion you, if you have replaced the item.

[sober]

Tax is not always logical, but if you apply the logic to this one, the wear and tear allowance is due to the person wo lets the property AND owns the furniture etc.

As you probably know, you can decide at the outset whether you claim W&T or renewals. If you had chosen renewals, and you had to replace a sofa, say, who would be entitled to the renewal allowance ? You or the "company" ? In my opinion you, if you have replaced the item.

Thanks CTA, that puts a logical framework, which does make it a bit easier to understand. Hence, according to this I should be claiming the allowance and not the company subletting the property on.

I have been on W&T bases form day 1 - hence the W&T question. Logically speaking - the company manging the property is building its margin by renting it for a bit less from me and letting it our for a bit more to the tenants. Normally W&T is based on the rent received before deductions of letting expense - whereas what I will be getting in hand will be net of these expenses. So should the 10% be on the actual rent received from the ultimate tenants?

Regards
Sober

[Tax Accountant]

Wear & Tear Allowance is a concession and not a legal entitlement.

You claim 10% of the rent you receive (net of tenant's expenses which you pay, if any, eg, council tax, electricity, gas etc). It is not 10% of what your tenant (the agent) charges to the sub-tenant (the ultimate tenant).

Another way of looking at this is that the agent is your tenant and that there are no letting fees.

Ramnik

[sober]

Thanks Ramnik for your succinct reply. Much appreciated.

Can the agent-tenant claim 10% W&T on the rent they receive from the sub-tenant on the basis of letting out furnished property?

If an item of furniture breaks they will be replacing it; whereas I will be repalcing things after a number of years.

Regards
Sober