Tax treatment of Property Purchase costs

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Tax treatment of Property Purchase costs

    Hi,

    I have just purchased a BTL and I want to make sure I get the accounting right between capital expenditure and expense

    I am assuming ....
    purchase price
    legal fees
    electronic conveyancing fee
    environmental search fee
    land registry search fee
    registration fees
    SDLT Completion fee
    stamp duty
    ... are all capital.

    (1) What about Telegraphic Transfer fee? Is this finance charge (expense) or is it still capital since related to the purchase?

    (2) What about my own CHAPS fee to transfer deposit and completion monies from my bank to my solicitor?

    (3) What about the cost of new furnishings for the property. I know is is not an allowable expense but does it go down as capital?

    (4) Likewise what about furnishings purchased from the vendor?


    Apologies if these are all blindingly obvious questions but I have read three books with explanations on this and none of them make it absolutely clear.

    Thanks in advance.

    #2
    Pre and Post Letting deductibles

    http://www.hmrc.gov.uk/manuals/pimmanual/

    http://www.hmrc.gov.uk/manuals/pimmanual/PIM2505.htm

    Only fees directly associated to acquisition of the property. Costs of financing are not.

    Regards Peter

    Comment


      #3
      Originally posted by TaxationPete View Post
      Only fees directly associated to acquisition of the property. Costs of financing are not.

      Regards Peter
      Thanks Peter. Yes I read those too from one of your previous posts.

      Perhaps I am being thick, but this is my first one so bear with me! In my examples 1 and 2 are they costs associated with finance (hence expense) or are they capital because they are associated with the purchase?

      And if an expense is not deductable from income, eg buying furniture, is it therefore a capital expense to offset against future CGT?

      Comment


        #4
        Check on these pages for Incidental Costs

        http://www.hmrc.gov.uk/manuals/CG1manual/cg15250.htm
        http://www.hmrc.gov.uk/worksheets/sa105notes.pdf
        Regards
        Peter

        Comment

        Latest Activity

        Collapse

        • Reply to Any property tax experts you can recommend please?
          by Trevor62
          Thank-you for the link.

          Well my issue is Tax & Assets.

          Firstly, I am in the process of building a house in my side garden, when complete I will own two properties.

          Will I have to pay stamp duty for the new build?

          Because I am an old dad and my...
          19-05-2022, 19:44 PM
        • Any property tax experts you can recommend please?
          by mpppen
          Hello,
          We have a small BTL portolio of five properties. Some are in our personal names and the latter ones in a property company we set up a few years' ago when the tax rules changed.

          I'd really like to find someone who can advise us of the best way of either bringing the personal...
          03-03-2022, 20:00 PM
        • Reply to Capital Gains Tax dilemma
          by Gordon999
          You have owned the property for 38 years ( 1984 - 2022 ) and lived in the property for 22 Years ( 1984-2006 ) plus 16 years for letting..

          The total capital gain over 38 years is apportioned between "residence period" ( exempt for cgt ) and "letting period" ( liable...
          19-05-2022, 10:07 AM
        • Capital Gains Tax dilemma
          by Ollyn
          Hello

          I am considering whether to sell my house which has been let for some time and need to see how I can best deal with CGT.

          I lived in the property from 1984 until 2006.

          From 2006 it has been occupied by tenants, now vacant and being renovated.

          ...
          18-05-2022, 18:17 PM
        • Reply to Capital Gains Tax dilemma
          by ash72
          You should seek advice from an accountant, or a property tax for tailored advice to your specific circumstances, you may be entitled to some relief if the property at any time was your own principal residence.
          18-05-2022, 21:14 PM
        • Reply to Capital Gains Tax dilemma
          by theartfullodger
          You declare (online) and pay CGT within 60 days of sale. Depending on the numbers I would expect you to pay CGT. What records do you have of applicable costs, etc?

          What you pay will depend on what CGT rules when you sell - v unlikely to be better than today, possibly worse. Covid,...
          18-05-2022, 18:29 PM
        • Reply to Tax Allowance on Rental Income.
          by Gordon999
          The property allowance is a tax exemption of up to £1,000 a year for individuals with income from land or property.

          If you own a property jointly with others, you’re each eligible for the £1,000 allowance against your share of the gross rental income.

          If your annual gross...
          18-05-2022, 16:47 PM
        • Tax Allowance on Rental Income.
          by banner257
          Can anyone help please, if a rental property is owned by two people 50 50. Would each owner be allowed to claim tax relief of £1000 each, or will the allowance of £1000 be split 50 50.
          Thanks
          18-05-2022, 08:42 AM
        • Reply to Tax Allowance on Rental Income.
          by jpkeates
          It's £1,000 each.

          Most landlords don't use this though, because it's rare for income from a rental property to be low enough to qualify,
          18-05-2022, 09:59 AM
        • Consent to Let - do we still need to pay tax
          by VIKKI99
          Hi, For kids school - we need to let out our Own House and move to a rental property close to school.
          The rental money I receive from my tenants is exactly same as rent I pay on my property where I am a tenant.
          Question : Rental money I receive from Tenants - should it be considered as income...
          18-05-2022, 01:07 AM
        Working...
        X