Reducing CGT on Residential Property Sale

Hello!
I am trying to come up with a strategy to reduce CGT or at least increase the amount of money I am left with after I sell a house I've been letting.

Bought for £118k in 1991 selling I hope in 2024 for £520k and it has been let for about 20 of those 32 years (I've been an "accidental landlord"). CGT is many 10s of thousands.

I was thinking if I refurbished the property spending say £80k including an attic conversion would the rental loss (annual rent is £24k) be offset against the capital gain and so reduce the CGT liability?

I guess the question I am asking is: If I do-up my BTL before I sell it will I net more overall (after tax) than if I just sell it in its current condition?

Hope that makes some sense.

Confused so would be very grateful for any thoughts.

The other part of this I guess is the question: is it generally better to modernise a house before selling it or just sell "as is".

Cheers

Paul








Comments

  • Jeremy535897
    Jeremy535897 Posts: 10,382
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    Never let the tax tail wag the dog. It's always best to adopt the route that makes the most profit, unless the tax rate exceeds 100%.

    An attic conversion may well be capital rather than revenue, so it would reduce your gain, not your rent. Rental losses are fairly useless as they can only be used against current year rental profits (on other properties) or future rental profits (subject to some limitations).

    Being very cynical, I suspect that the majority of the profits seen on Homes Under the Hammer, when a straightforward property is done up a bit, derive from the movement in the market over the period of ownership, rather than the improvements. Doing a property up may make it easier to sell, however.
  • pdab
    pdab Posts: 10
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    Thank you Jeremy. "Never let the tax tail wag the dog" - awesome and a good axiom to keep me on the straight and narrow re this. 
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