tax treatment for lease extension costs

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    tax treatment for lease extension costs

    I'm going to incur £8k to extend my lease. Originally I thought this would only have a capital gains impact, but as it reduced my ground rent (whcih is a cost against income), can I offset a proportion of the costs against rental income ?

    #2
    A lease is capital in nature and do not believe that a portion can migrate in the revenue column. Regards Peter

    Comment


      #3
      Natch Pete!

      A lease premium may be deductible in all sorts of ways - though I doubt it will be of help to OP as he probably doesn't have a trading business nor use it to run his rental business from.

      http://www.hmrc.gov.uk/manuals/bimmanual/BIM46255.htm

      http://www.hmrc.gov.uk/manuals/pimmanual/PIM2330.htm

      Comment


        #4
        Also, a premium for a lease of 50yrs. or less is (I recall) treated as L's income.
        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
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        Comment


          #5
          Originally posted by jeffrey View Post
          Also, a premium for a lease of 50yrs. or less is (I recall) treated
          PARTLY
          as L's income.
          http://www.hmrc.gov.uk/manuals/pimmanual/PIM1205.htm

          Comment


            #6
            Tax treatment - lease extension

            What is not widely known is that for those granting lease extensions if they are granted strictly pursuant to the terms of the 1993 Act the grantor is allowed to "roll over" the premium and defer the tax liability on the premium provided the proceeds are reinvested in "land" either twelve months before the premium is received or up to three years later.

            Comment


              #7
              Indeed, under the compulsory purchase legislation.

              http://www.hmrc.gov.uk/manuals/CG4manual/cg61900.htm

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