Tax treatment of Property Purchase costs

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    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

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