Will essential repair costs reduce my capital gains tax liability?
Question I am selling a house which I have owned for three years in Bath, which was transferred to me by my husband. It is let in three flats. It was valued when I acquired it at £800,000, and I am selling it for £925,000 for completion of the purchase on 1 July 2018. I am 70 years old and would like clarification on the likely capital gains tax which I would be liable for. I have spent some £100,000 on essential repairs and renovations since owning the house
Arthur Weller replies:
The answer to your question involves determining the nature of your £100,000 expenditure. If it was wholly capital expenditure, it can reduce the £125,000 capital gain to £25,000. If none or only some of it was capital expenditure then the £125,000 will not be reduced, or only partly reduced, accordingly. Look at HMRC’s guidance at: www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2025 and pim2030 to find out what is capital expenditure, and what is not.
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