CGT Expenses

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    CGT Expenses

    Dear Forum,

    I'm just doing my CGT online and needing to add a number of expenses that I always believed were CGT, but now after reading numerous articles online I'm not sure if these can be claimed, and would welcome any advice

    My biggest expense was needing to convert 2 basement rooms as these both had water entering into them due to a poor initial job, with the rooms needing work doing to the concrete floor (dig out waterproof) and all walls going back to bear brick so that they could be tanked properly. In addition new windows / lightwells were added to comply with the size required for fire escape etc, with both rooms needing to be fully plastered / wired /plumbed / decorated etc as was advised they didn't comply with building regulations.

    The properties kitchen was refitted when I purchased the property as didn't comply with HMO standards, with the sinks / oven and I added basic items such as Washing Machine and cupboard space for each tenant plus additional worktop area..

    The 2 bathrooms within the property and a number of rooms had sinks (but not usable - poor plumbing) so I added 2 new bathrooms / showers and new sinks to all bedrooms.

    There was never any insulation within the property so this was added by normal means in the conventional loft area, but 2 attic bedrooms needed substantial work to add insulation due to a false ceiling being added.

    Is there anywhere that gives a clearer guideline, as it seems that things such as extensions are clearly a CGT allowance as they add value, but not sure about the others, they have improved the value and living standards whilst complying with council / government requirements.

    Thanks for your time / thoughts,

    It's not black and white, because what is allowable depends on the specific circumstances of the work and property.
    Some of the work you describe could easily be maintenance, for example, the basement rooms could easily be a repair to correct water coming in, and the sinks sound like replacements.

    But If they were done as part of a series of preparatory work pre-letting, all or some of the work might be capital.
    Improving things to comply with regulations is probably capital, but if you're re-wiring it might also be maintenance.

    Some things, like new bathrooms and windows are pretty certain to be capital.

    You're going to have to take a view of each element and decide whether it's capital or not.
    You could use an accountant, but they do tend to be hyper cautious.
    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).


      I suggest you calculate your "total expenses" and then :

      subtract the expenses incurred for maintenance of existing items ( which are chargeable against rental income ) and

      balance of expenses will be "improvement costs " plus the original purchase cost = the total capital cost .

      Your work appears to be a "substantial refurbishment" ( not maintenance job) and should be treated as improvement and the cost is an expense against the capital gain..

      If in doubt , consult a tax accountant.


        Thank you jpkeates and Gordon999, it does look like each case will have different merits, but I've always believed the work to be capital in nature, the work in basement was done after water came into property which then had council involved and independent consultant advised council that room was not fit for purpose, so substantial work was done to rectify issues so rooms could be let.

        I never claimed for kitchen / bathroom as maintenance chargeable against rental income, nor have I for other aspects that I believed were capital in nature (insulation), so will try and ask / find answers.

        Thanks for your time.


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