When you replace domestic items, you may sell or part exchange the old item. This may result in incidental costs of disposing of the old item or buying the new item. To work out the allowable deduction for the new item you should: Add together the cost of the new replacement item and any incidental costs for disposing of the old item or buying the replacement. Deduct any amounts received on disposal of the old item. Use the cost of an equivalent item at step 1, if your new replacement item is an improvement on the old item. Read an example of how to calculate deductions .