renovation costs

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    renovation costs

    Hi, I currently have a house which i purchased this tax year and in the middle of renovating it at a cost of about £20,000. I have not decided if I am going to rent this house out or sell it.
    If I sell it in the new tax year can I claim the £20,000 renovation cost as a loss in this tax year and what happens if i do and then sell it in the new tax year.

    Same question applies if I rent it out can I claim the £20,000 as a loss.

    The property had been empty for 10 years and I have evidence that the property was in need of renovation to make it habitable again

    thanks

    #2
    If you bought the property cheaply because of the necessity to renovate, the cost of the work is likely to be allowable against capital gains tax (and not income) if you let it.

    It's possible the renovation is a combination of capital and repair/maintenance (which is allowable against future income).

    If you buy, rennovate and sell on, the increase in value is likely to be income (as it's property development, not property investment) and the cost is allowable against that income.

    As what you intend to do with the property is a key element of how it's taxed, not knowing (and being able to show) what you intend is a little unhelpful.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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