renovation and tax

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    renovation and tax

    hi, does anyone know what costs that are allowable with regards to renovation?? i am assuming that any costs you incur would be in brining the asset to its current location and therefore a capital cost? ie. building decorating, is this correct?

    how would you treat interest incurred in this, i am confused as there is no actual income to offset this against only capital gain???? can you offset i against this???

    Thanks
    Many Thanks
    Steve P

    #2
    Originally posted by stephenp View Post
    hi, does anyone know what costs that are allowable with regards to renovation?? i am assuming that any costs you incur would be in brining the asset to its current location and therefore a capital cost? ie. building decorating, is this correct?

    how would you treat interest incurred in this, i am confused as there is no actual income to offset this against only capital gain???? can you offset i against this???

    Thanks
    Are you asking about income tax or capital gains tax?

    Some pre-letting expenses incurred to make the property more attractive to let, eg decorating, are allowable as an expense of lettings business.

    Interest on a loan to purchase a property which has been let is allowable as an expense of the lettings business but not allowable for CGT purposes.

    Only those expenses which reflect in the value of the property, eg improvements, may be claimed as an allowable cost in the calculation of CGT.

    Ramnik
    Private advice is available for a fee by sending a private message.

    Comment


      #3
      renovations

      I was thinking about CGT, if there is no letting involved and the property was purchased and then updated then sold are all the updating costs such as plastering and new kitchen, bathroom etc allowable against CGT???

      Cheers
      Many Thanks
      Steve P

      Comment


        #4
        I Suppose the question i was asking is that income treated as a capital gain or a schedule A income??
        Thanks
        Many Thanks
        Steve P

        Comment


          #5
          Originally posted by stephenp View Post
          I was thinking about CGT, if there is no letting involved and the property was purchased and then updated then sold are all the updating costs such as plastering and new kitchen, bathroom etc allowable against CGT???

          Any expense which has reflected in the selling value of the property is treated as an enhancement expenditure and taken into account in the calculation of Capital Gains Tax. But if the expenditure has been incurred in trying to let the property and you subsequently decide not to rent but sell, some of the expenses may not be claimed in the calculation of Capital Gains Tax.

          I Suppose the question i was asking is that income treated as a capital gain or a schedule A income??

          If there has been no letting, there is no income to talk about.

          All profit on the sale of the property is taxed to Capital Gains.

          But if you are involved in the business as a property developer, ie renovating and selling, you are treated as engaged in running a business and taxed to income tax and NIC.


          Thanks

          Cheers
          See replies above in red.
          Ramnik
          Private advice is available for a fee by sending a private message.

          Comment

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