I am setting up a new rental property as to be rented out as a furnished letting. I understand that the furnishings themselves are treated as depreciating assets, however can I deduct the interior design service charge in full in the year it was incurred or does it have to be amortised in a similar way to borrowing expenses
I doubt whether this expense would be deductible. Unlike furnishings which are a capital expense so can be claimed over the term of their effective lives the interior design fee is a service charge and the expense is made before any income has been earned. There is an old tax saying "point too soon" whereby any expense made before an income earning activity has started (whether it be a job, a business, or a rental property) cannot be claimed as a deduction.
I doubt whether this expense would be deductible. Unlike furnishings which are a capital expense so can be claimed over the term of their effective lives the interior design fee is a service charge and the expense is made before any income has been earned. There is an old tax saying "point too soon" whereby any expense made before an income earning activity has started (whether it be a job, a business, or a rental property) cannot be claimed as a deduction.
That has got me thinking with respect to timelines. The sequence of events was as follows
1) Purchase Property with sitting tenant and collect rent for 3 months
2) Tenant moves out and decision is made to switch from an unfurnished to a furnished rental
3) Void period 1 month
4) Rented out on a furnished basis and collecting rent
This seems to point to the expense being incurred after income had started to be earned - would this increase the likelihood of making this expense deductible?
22 Apr 2024 · 6 min read time
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