BTL that was previously a home - improvement costs included in CGT calculation?

itwasntme001

I own a BTL that was previously my home for a few years after I bought it.  I did some improvement works to it a year after I bought it.  Then a few years later I decided to let it out and it has been a BTL ever since.

If I were to sell the property, for CGT calculation purposes, can I include the costs incurred for the improvements I did, even though it was not incurred "wholly and exclusively" for the BTL business?

I understand for revenue purposes any expenses incurred before the first tenancy starts can be included as a cost against revenue as long as it was incurred "wholly and exclusively" for the btl business.  So would the same concept apply for capital costs?

Bookworm105

what people forget is the gain on all property is subject to CGT on sale.
However, where it has been your main home the whole time you get 100% tax relief in the form of PRR.
Where it wasn't for the whole time you get partial relief, but the gain remains the gain.

Your capital improvements contributed towards the size of your gain, therefore their cost must be taken into account when calculating the gain.

In essence, you will get some PRR on their effect on the value for the time it was your home and pay CGT on "them" for the time it wasn't. 

p00hsticks

What sort of 'improvement' works ? Not all types of improvement are eligible to be included.

If you are talking about things like replacing the kitchen and bathroom and you did them many years ago when you first moved in (even if they are eligible) then I believe you need to look at how much they are improve the property at the point of sale from when it was purchased, rather than how they would have improved the potential resale value at the time they were installed. 

CG15180 - Expenditure: enhancement expenditure - HMRC internal manual - GOV.UK (www.gov.uk)

mybestattempt

p00hsticks said:

What sort of 'improvement' works ? Not all types of improvement are eligible to be included.

CG15180 - Expenditure: enhancement expenditure - HMRC internal manual - GOV.UK (www.gov.uk)

An important point for the whole period of ownership.

In particular to the period when the property was let the OP has already alluded to the distinction between revenue expenditure which can be claimed as a deduction from rental income and capital expenditure which cannot.

So, if any part of the "improvement" costs have already been claimed as a deduction (revenue expenditure) from rental income that amount should not be claimed as a deduction (capital expenditure) in calculating the capital gain.