Capital Gains Tax advice - buy to let property

Goodadvice75

Hi,

I bought a flat as an investment with a buy to let mortgage about 5 years ago. I've just put it on the market to try(!!) to sell it as it is becoming too costly and time consuming to keep on as my circumstances have changed.

I'm trying to work out what my CGT liability would be and would be grateful for any advice on what I can legitimately deduct.

The estate agents' valuations mean I might realise around £30,000 of gross gain, although I'm not overly optimistic about this the way the market is at the moment .... !

Pls can anyone help with a calculation for what deductions can be made to lower my CGT liability?

I know I can deduct costs of purchase (solicitors, stamp duty, land registry) but can I deduct the mortgage arrangement fee as well?

Similarly the costs of sale (estate agents' commission, solicitors).

I did a fair amount of refurbishment, new windows and boiler etc., work to the electric meter. Am I allowed to deduct these costs also?

Is there anything else I can make an honest deduction for?

Would be very grateful for any advice - thx in advance.

Murdina

You can claim a deduction for the costs of purchase and sale and any improvement expenditure reflected in the value of the property when you come to sell it.

http://www.hmrc.gov.uk/manuals/cgmanual/CG15150.htm

and following pages.

Did you actually let it out? You mention for example new windows - did you not claim for those as “repairs”? If they were just replacements or even if moved from single to double glazed probably nearer to repairs than improvements:

http://www.hmrc.gov.uk/manuals/pimmanual/PIM2020.htm

but if you did not claim then you could perhaps try and go for it on sale.

Don’t forget that the first £10,600 of gains are tax free if you have made no other gains this year and it may be more if the Chancellor puts this up in his budget.

You cannot claim for the mortgage fees as those are costs of arranging finance, not of purchasing the property.

Murdina

You can claim a deduction for the costs of purchase and sale and any improvement expenditure reflected in the value of the property when you come to sell it.

http://www.hmrc.gov.uk/manuals/cgmanual/CG15150.htm

and following pages.

Did you actually let it out? You mention for example new windows - did you not claim for those as “repairs”? If they were just replacements or even if moved from single to double glazed probably nearer to repairs than improvements:

http://www.hmrc.gov.uk/manuals/pimmanual/PIM2020.htm

but if you did not claim then you could perhaps try and go for it on sale.

Don’t forget that the first £10,600 of gains are tax free if you have made no other gains this year and it may be more if the Chancellor puts this up in his budget.

You cannot claim for the mortgage fees as those are costs of arranging finance, not of purchasing the property.

Goodadvice75

Hi Murdina,

Many thanks for your reply which is helpful.

You ask if I let it out, yes, it has been let for the best part of 5 years (ish). There was a short stint where I lived in it myself right at the beginning when I was having a change of heart and thought I wanted to live there but then changed my mind. So for the majority of the time I've owned it it has been let.

I've read about "lettings relief" but think that only applies to a property you own as your main residence and then let out, so that I couldn't claim anything under that, am I right on this though as I find it confusing.

Thx again.

AIFOP

You should be able to claim the mortgage arrangement fees against rental income. But not capital gains.

http://aaatax.co.uk/bank-loan-fees

CLAPTON

Goodadvice75 wrote: »

Hi Murdina,

Many thanks for your reply which is helpful.

You ask if I let it out, yes, it has been let for the best part of 5 years (ish). There was a short stint where I lived in it myself right at the beginning when I was having a change of heart and thought I wanted to live there but then changed my mind. So for the majority of the time I've owned it it has been let.

I've read about "lettings relief" but think that only applies to a property you own as your main residence and then let out, so that I couldn't claim anything under that, am I right on this though as I find it confusing.

Thx again.

if you genuinely lived in the house then you can claim principal private residence reliefs.
i.e. period you lived there, the last three years and letting relief
which would probably reduce the cgt to zero

maybe provide some more details