Share of Freehold Implication for Capital Gains Tax Allowances

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    Share of Freehold Implication for Capital Gains Tax Allowances

    I am in the process of selling a flat that was purchased as a 'normal' Leasehold property in 2015. Last year I purchased a share of the freehold (there are 24 flats in the block with now, 19 other 'Share of Freeholders' having also purchased). My question is this:-
    I am now selling the flat and am interested to know if someone can advise me as to where I stand, regarding CGT allowances, when I submit to HMRC the sale/profit details.
    The flat was purchased (without the share of freehold element) at £250,000. I am now selling it for £260,000 - which now includes the cost element of the 'Share of Freehold'.
    Q. Am I able to claim, as an off-settable 'Allowable Expense' the original cost I paid for the Share of Freehold fee (therefore reducing the amount of declared 'profit') or; should the Share of Freehold fee that I originally paid, be classed as a cost incurred, and classed as an 'overhead' for submission, instead, in my annual tax return 2020-21 year?
    I would be grateful for any comments received.
    Thanks DMR

    #2
    Originally posted by DMR View Post
    Q. Am I able to claim, as an off-settable 'Allowable Expense' the original cost I paid for the Share of Freehold fee (therefore reducing the amount of declared 'profit') or; should the Share of Freehold fee that I originally paid, be classed as a cost incurred, and classed as an 'overhead' for submission, instead, in my annual tax return 2020-21 year?
    That's a capital expense and is allowable against the gain.
    Which is a shame, because it looks like the gain is already less than your personal allowance.
    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
      Always good to get an opinion but. Having firmly advised me that 'that's a capital expense allowable against the gain', which I take as a stated fact, I'm a little confused that you also advise me that I should 'check with an adult/some kind of expert (for the correct answer to my question raised)?
      What I am really looking for is a 'definitive' answer to my original question..
      Thanks anyway, for responding to my initial question raised.

      Comment


        #4
        Originally posted by DMR View Post
        Always good to get an opinion but. Having firmly advised me that 'that's a capital expense allowable against the gain', which I take as a stated fact, I'm a little confused that you also advise me that I should 'check with an adult/some kind of expert (for the correct answer to my question raised)?
        What I am really looking for is a 'definitive' answer to my original question..
        Thanks anyway, for responding to my initial question raised.
        That text is automatically added to all of my posts (and I don't actually see it myself).
        It's there because this is an anonymous web forum and while you can get useful advice and opinions you shouldn't rely on it.

        I am confident in my opinion, but I am not qualified to give tax (or any other financial) advice, because those are regulated activities.
        And the reverse is true, no qualified person should ever offer their opinions on this kind of forum.

        If you want a definitive answer, you'll have to ask HMRC (and they're biased) or find a suitably qualified person who's views are backed by professional indemnity insurance (in case they're wrong).
        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


          #5
          Many thanks for getting back to me with your further comments. I appreciate your sentiments and points made.

          Comment


            #6
            Jpk . is correct . The cost for share in the freehold company is a "capital expense" and added to the "original purchase cost" to give "total cost" for calculating the capital gain..

            Comment


              #7
              Many thanks for re-iterating jpk's original comments. Most helpful.

              Comment

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