CAPITAL GAINS TAX - IMPROVEMENTS ALLOWABLE ?

jps2004

Hi, I wonder if anyone could offer some guidance on this scenario please ?
I am selling a house which was originally my own residence, but since 2016 I have let it out. I have made a capital gain of £109,274.
The two queries i have are:
1) Can I claim private residence relief for the 191mths (out of 232mths owned)  I was living there myself, thus reducing my gain to £19,311 (ish) ?
2) I carried out some internal works to the property in 2005 which amounted to £20k. The previous owners had built on an extension to the property but it was still a shell when I bought it in 2000, so I saved and then added a new kitchen diner/living open plan space. Can I incorporate this into my CG calcs as improvements allowance to reduce my gain, or is this not allowable as it was so far in advance of the rental ?

HMRC is not especially easy to follow on this, so hoped someone out there could advise ?
Thanks

Jeremy535897

Taking your figures, you can claim main residence relief for 200 months out of the 232 months owned, because the property used to be your main residence, and therefore the last 9 months of ownership are also exempt (assuming this was your only home in the 191 months).

Any improvements have to be reflected in the value of the property when sold, and a 15 year old kitchen since used by a tenant probably is not. However, putting the electrics, floor and plumbing in probably do qualify. If your gain is now £15,072 because of the last 9 months exemption, you only need improvements of £2,772 to eliminate your tax bill, assuming you have no other gains or losses.

If you do owe any tax, you must report the gain and pay the tax within 30 days of completion. See:
https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

[Deleted User]

Would purchasing and selling costs go some way towards eliminating any chargeable gain?

jps2004

[Deleted User] said:

Would purchasing and selling costs go some way towards eliminating any chargeable gain?

Yes they have already been reflected in the gain I quoted above. Thank you for checking though.

dctrgre

Jeremy535897 said:

Taking your figures, you can claim main residence relief for 200 months out of the 232 months owned, because the property used to be your main residence, and therefore the last 9 months of ownership are also exempt (assuming this was your only home in the 191 months).

Any improvements have to be reflected in the value of the property when sold, and a 15 year old kitchen since used by a tenant probably is not. However, putting the electrics, floor and plumbing in probably do qualify. If your gain is now £15,072 because of the last 9 months exemption, you only need improvements of £2,772 to eliminate your tax bill, assuming you have no other gains or losses.

If you do owe any tax, you must report the gain and pay the tax within 30 days of completion. See:
https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

Re the improvements/calculation; you need to work out the ‘raw’ gain on the property, including allowable improvement expenses, then apply the 191/232 private residence relief.

ie you would need significantly more than £2,772 more expenses to not have a liability.

Jeremy535897

dctrgre said:

Jeremy535897 said:

Taking your figures, you can claim main residence relief for 200 months out of the 232 months owned, because the property used to be your main residence, and therefore the last 9 months of ownership are also exempt (assuming this was your only home in the 191 months).

Any improvements have to be reflected in the value of the property when sold, and a 15 year old kitchen since used by a tenant probably is not. However, putting the electrics, floor and plumbing in probably do qualify. If your gain is now £15,072 because of the last 9 months exemption, you only need improvements of £2,772 to eliminate your tax bill, assuming you have no other gains or losses.

If you do owe any tax, you must report the gain and pay the tax within 30 days of completion. See:
https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

Re the improvements/calculation; you need to work out the ‘raw’ gain on the property, including allowable improvement expenses, then apply the 191/232 private residence relief.

ie you would need significantly more than £2,772 more expenses to not have a liability.

It's 200/232, but yes you are right. It would be £3,215.