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My client owns a furnished holiday letting property, for which he paid £200,000, plus £10,000 for the furniture and contents. He has claimed the 10% wear and tear allowance. Occasionally, other furniture has been purchased, but he has made no claim for the cost of that furniture.
The client is now selling the property for £300,000 and, depending on negotiations, the furniture may be sold for (a) £8,000 or (b) £12,000.
My client owns a furnished holiday letting property for which he paid £200 000 plus £10 000 for the furniture and contents. He has claimed the 10% wear and tear allowance. Occasionally other furniture has been purchased but he has made no claim for the cost of that furniture.
The client is now selling the property for £300 000 and depending on negotiations the furniture may be sold for (a) £8 000 or (b) £12 000.
I think that the capital gain is £100 000 before taper (i.e. one completely ignores the furniture) but what — if anything — is the income tax (or capital gains tax) treatment of the furniture? Is the receipt for the furniture ignored as the cost was ignored? And does it make any difference if the 'pool' of furniture is sold at a gain or at a loss?
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