Are Lease extension fees offsettable against income tax?

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    Are Lease extension fees offsettable against income tax?

    Hi all,

    I have a flat let out which has just over 80 yrs left on the lease. I have started the ball rolling regarding the statutory extension and am wondering which fees, if any, are tax deductible?

    The provisional figures I have are:
    Lease extension itself - £10,000
    My surveyors and legal costs - £2,500
    Freeholder's surveyors and legal costs (which I pay) - £2,500.

    Can I claim any of this against my tax liability?

    Chris.

    #2
    I think that they're all really capital expenses and can be claimed against the gain when you sell.
    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).

    Comment


      #3
      In fact for leases less than 50 years (not you) it can be partly revenue and partly capital expenses via a formula:
      (capital element is 2% for each year of the lease minus one). The idea is that when the lease is only one year remaining it is all revenue (a bit like paying rent for that year).

      But for OP all of these expenses, as above, are purely capital, so not deductible against rent received.

      Comment


        #4
        amazing that your own and the s60 fees add as much as 50% to the consideration

        Comment


          #5
          Originally posted by ATC View Post
          amazing that your own and the s60 fees add as much as 50% to the consideration
          Well lawyers have to get paid around £2000 an hour don't they. The grand theft by this closed-shop trade body that nobody in power wants to deal with.

          Comment


            #6
            Originally posted by jpkeates View Post
            I think that they're all really capital expenses and can be claimed against the gain when you sell.
            Yes. That's what I had thought.

            Originally posted by ATC View Post
            amazing that your own and the s60 fees add as much as 50% to the consideration
            Yes. I thought this steep too. but, as I left it so late (the lease gets to 80 yrs unexpired this month) I thought to use the services of a 'lease extension company' rather than source surveyors and lawyers myself. I am sure they are adding a percentage on top.

            Thanks for the confirmation guys.

            Comment


              #7
              Re: '
              amazing that your own and the s60 fees add as much as 50% to the consideration'
              'The grand theft by this closed-shop trade body that nobody in power wants to deal with.'

              I thought I read that government was showing signs of tackling the whole leasehold system, which appears to be one of the greatest scams and rip offs in the country, given the millions of people it disadvantages.

              Comment


                #8
                You did but I suspect that they will just tiddle around at the fringes with it; changing things retrospectively is too difficult. I believe that professional costs payable by leaseholders embarking on lease extensions will be drastically capped

                Comment

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