tax / cgt question for renovating property

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    tax / cgt question for renovating property

    I purchased a shell of a house that was structurally sound but needed complete refurbishment. The house had been ransacked many items. eg All the radiators & copper pipe had been ripped from the walls.
    A builder completed all the work from start to finish. The final cost was an all-in job & was not itemised.
    I am struggling to work out how this would be calculated for tax reasons. What would need to be kept back for CGT
    eg - there was no kitchen - I purchased the kitchen myself, but the builder fitted it. He also supplied the hob & oven.
    There was no bathroom - but again, he supplied & fitted.
    Windows & Doors was done separately & certified.
    The garden was cleared after years of overgrowth. Fence replaced (well, the old fence was non existent).
    There was scaffolding to repair the roof - the house had to be re-rendered. Flat roof replaced because it was leaking in multiple places.
    I have a list of work that had to be done form the local council to bring it back into order (I was aware of the orders before purchase) - this includes fitting a ktichen, bathroom, suitable flooring to cover the concrete base, etc. every wall & ceiling had to be replastered & in somecases the lath & plaster replaced for plasterboard. New doors, new boiler, plumbing.complete rewire to bring it up to current regulations.

    I am struggling on what I need to claim against tax & what is CGT.


    #2
    I'd suggest that based on that description, all of the work was probably capital.
    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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      #3
      If you purchased a building shell , and had the builder carry out the refurbishment work , then enter all expenses as an improvement in your records. You paid the builder by cheque and should have kept bank statements to show all payments .

      No need to break down the cost into operating and capital expense. Treat all costs as capital expense , which reduces your liability to capital gain tax .

      Comment


        #4
        It may certainly be beneficial to allocate some of those expenses to running costs, electrical work required for the NEIC certainly is solely for the letting. Depends how much profit you are likely to make though, you'll have to do some sums .

        Comment


          #5
          See the following property income manual, from HMRC , may be of some help.

          https://www.gov.uk/hmrc-internal-man...manual/pim2030

          Comment


            #6
            Originally posted by dp17 View Post
            See the following property income manual, from HMRC , may be of some help.

            https://www.gov.uk/hmrc-internal-man...manual/pim2030

            The underlying principle is that the cost of buying a property in good condition is clearly capital expenditure. Hence the cost of buying a dilapidated property and putting it in good order is also capital expenditure.

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