The known exclusion of claiming capital allowances on dwellings, is for many an instant disregard when developing residential towers. It is certainly true that allowances cannot be claimed beyond the front door of a residential flat, however, we explore how PRS may bring about greater scope to claim.
Those investors that are in the PRS market or are considering PRS as an investment sector, are typically considering large-scale developments, both in size of building and in the number of units. With the construction of such mini cities, inevitably there will be significant common area space factored into the design, to add appeal and to boost rental levels.
It is this common area which falls outside of the definition of a dwelling and which can attract capital allowances. By design, the larger developments will require increased vertical transportation costs, greater main core plant to serve cores and in addition, there will be other facilities such as gyms, restaurants and lounges which will all contain qualifying plant which can attract capital allowances.
With the abolition of the 10% wear and tear allowance, and the introduction of deductions only being allowable for actual costs incurred, which for a new build will be minimal in the early years, the level of available tax relief has been cut. For a new build development, the only available deductions to offset against the rental income, will be the capital allowances.
To discuss how Veritas may be able to assist on claiming capital allowances, please visit our website to contact one of our Directors.