Loft conversion and CGT

skillboy

If I spent £35,000 doing a big loft conversion on my house then sold the property a few year later for a profit of £60,000, does this £35,000 investment get taken off the profit for CGT purposes?

Carl31

skillboy wrote: »

If I spent £35,000 doing a big loft conversion on my house then sold the property a few year later for a profit of £60,000, does this £35,000 investment get taken off the profit for CGT purposes?

As long as its your primary house, ie one you live in and not one you use for investment purposes, CGT wont apply as it will be subject to PPR

PPR covers anything that is classed as your "dwelling" meaning your house, and anything connected to it

skillboy

What happens if the property is an investment property i.e. BTL that you intend to sell a few years later?

After having researched the area and similar houses you figure that doing a loft conversion will cost you around £35,000 but will likely add around £50,000 to the value of the property. Is there a way to offset the £35,000 cost of doing the conversion with any profit made to reduce CGT?

00ec25

skillboy wrote: »

What happens if the property is an investment property i.e. BTL that you intend to sell a few years later?

After having researched the area and similar houses you figure that doing a loft conversion will cost you around £35,000 but will likely add around £50,000 to the value of the property. Is there a way to offset the £35,000 cost of doing the conversion with any profit made to reduce CGT?

you've been letting a property since at least 2017, have you read nothing about CGT?

Of course you can include the cost of CAPITAL investments when working out that your taxable capital gain will be since: gain = sale price - costs spent.

A project such as loft conversion would (in principle) be a fairly straightforward case of nearly every penny spent would be classed as capital costs not revenue costs and so count towards the reduction in the gain

HMRC use the term "enhancement expenditure" for capital costs in the CGT manual, here is chapter and verse on the subject:
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg15150p

you may also find this a useful summary of the distinction between capital and revenue deductions in the context of property income and tax on rent
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2030
(ignore reference to "capital allowances" as they do not apply to a straightforward residential letting property)