Sign up to get our free landlord tax strategies


To receive our seven FREE landlord tax saving strategies just simply complete the form below and the first strategy will be emailed to you immediately.

Sign up to get our free landlord tax strategies

Thank You!

Seven FREE property tax busting strategies reveal the secrets of how to legitimately beat the taxman and boost your property profits!
View All Questions

Can I offset the cost for extending the property lease?

Question

I have purchased a property for £95000 in 2000. Afterwards I was living in the property for two years and have gradually renovated the place. I also bought a lease extension to increase the lease from 74 to 164 years. Before letting it out two years after purchasing it, I re-mortgaged and the property was valued £170000.

When I sell the property will I be liable for CGT of £75000 even though I increased the value through my renovation? Also, can I offset the cost for the lease extension (£15000)?

 

Arthur Says

Firstly, if the property renovations have been of a ‘capital nature’ i.e. they have increased the value of the property then they can be deducted from the final selling cost.

 

Secondly, the cost of the lease extension is an allowable expense for CGT purposes – see the Inland Revenue Manuals page CG 71401.

 

Thirdly, because you lived in the property, principal private residence relief and private letting relief will be available to reduce the gain.

 

Non business asset taper relief will also be available, and probably the CGT annual exemption also.

 

So the final assessable gain is likely to be a lot less than £75,000.

 

Case Study

Landlord Tax Secrets Get our SEVEN FREE Landlord Tax Saving Strategies - Guaranteed To Slash Your Property Tax Bills!
Click here for more.

Got a burning tax question?

Why not submit a tax question to our tax advisors

Ask a Question