1. What is Capital Allowance?

Capital Allowance is a tax deduction that rental property owners in Ireland can claim for wear and tear on qualifying assets like furniture and fittings. It's calculated at 12.5% of the asset cost per year for 8 years.

2. How Does the Calculator Work?

The calculator uses the standard capital allowance formula:

Where:

• Cost of Qualifying Asset — Original purchase price of eligible items (EUR)
• 0.125 — The standard 12.5% annual allowance rate
• 8 years — The total period over which allowance can be claimed

Explanation: The calculation spreads the tax deduction evenly over 8 years at 12.5% per year of the original cost.

3. Importance of Capital Allowance

Details: Claiming capital allowance reduces taxable rental income, lowering your tax bill. It's particularly important for furnished rental properties with significant furniture and fittings investments.

4. Using the Calculator

Tips: Enter the total cost of qualifying assets in EUR. The calculator will show both the annual allowance and total allowance over 8 years.

5. Frequently Asked Questions (FAQ)

Q1: What qualifies for capital allowance?
A: Furniture, appliances, and fittings like beds, sofas, cookers, and carpets typically qualify. The property itself doesn't qualify.

Q2: Can I claim if I bought the property furnished?
A: Yes, you can claim on the market value of qualifying assets at time of purchase.

Q3: What if I sell the asset before 8 years?
A: You may need to account for a balancing charge or allowance - consult a tax professional.

Q4: Can I claim for improvements?
A: Only the cost of new assets qualifies, not improvements to existing ones.

Q5: Is there a maximum claim amount?
A: No maximum, but claims must be reasonable and for genuine business use.