capital gains tax in scotland

linda64

Hi looking for some help here. We have had a flat that we were renting out we are now wanting to sell it. The flat was purchased in my husbands name in 2003 for £95000. We refurbished the flat and converted into two bedrooms spent about £20000. In 2022 my husband gifted the flat to me probably valued at £180000.Done through lawyer no money exchanged. I now want to sell the flat which is worth £250000. I have been staying in the flat for about 4 months now and spent about £15000 on it. what figures do i use to calculate capital gains tax.

p00hsticks

linda64 said:

I have been staying in the flat for about 4 months now and spent about £15000 on it. what figures do i use to calculate capital gains tax.

Are you implying that you are now formally separated from your husband ? Where is he living ?
A married couple can only have one main residence between them  for CGT purposes.. 
What did you spend the £15k on and when ?

Bookworm105

assuming you remain married to him the 4 months living there is irrelevant as it is not (and never has been) the marital main home.
the value at date of gift is irrelevant,

are you 100% certain the £20k refurb and the 15K preparing for sale expenditure is 100% capital in nature?

the basic calculation will be 250,000 sale value less 95,000 purchase cost - capital expenditure - legal and EA fees for gifting and selling - 3,000 CGT allowance (assuming no other gains that tax year) = net taxable gain 

Presumably there was a sound reason why you made it sole rather than joint ownership - far too late to correct  that now.

linda64

hi thanks for reply . We are still married just moved into the flat as we hit a bit of a rocky patch and I needed a break. The money i spent was on a new kitchen and bathroom and new carpets the flat was very tired after being rented for so long. My husband was on the higher tax bracket and a financial adviser advised us to put the flat in my name at the time to avoid the higher tax.

Bookworm105

the rental business ceased when the final tenant moved out
you are selling up and therefore you cannot claim costs under the business cessation rules as you will not have a future rental revenue stream to offset them against, so you are looking at what counts as allowable capital costs  

carpets are not capital costs. You cannot claim anything for them nor can you for redecoration (painting, soft furnishings etc) or the likely basic repairs arising from fixing the mess left by tenants 

new kitchen, as already mentioned, depends on whether it was replacement or significant improvement 
same with a bathroom

just because they are "tired" and need refreshing to make the place look better for sale does not automatically make the kitchen or bathroom a capital "improvement" allowable against CGT