New landlord advice - CGT & maintanence offset tax

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

    New landlord advice - CGT & maintanence offset tax

    Hi everyone,
    I am looking to buy a new house and rent my existing. I have 2 questions.

    1. If I rent my existing house for 12 months and then sell it within the next 6 months I can reclaim the 2nd home stamp. My question is whether I will need to pay CGT as I have rented it??

    2. I will rent the house unfurnished but I need to do some maintenance repairs before renting,
    A. Paint the soffits and facia.
    B. Replace a threadbare carpet
    C. Replace a 3 way CH/HT valve
    D. Remove an over grown tree in the garden.
    My question is, are these all approved expenses? Can I subtract the costs from the tax I'm due to pay? Is it ok to action these before tenants move in so that I can still claim against tax??

    Any advice is appreciated! Thanks

    #2
    1 - You will not have rented it for long enough to attract any CGT - you have an 18 month allowance, so the CGT bill will be zero.
    2 - All of those are allowable expenses (you will find conflicting advice about carpets, as the rules have changed recently), they are treated for tax as though they are incurred on the dat your first tenant moves in.
    Note that you can't claim for your own time/labour (or tools), so if you are doing the work, it will be materials only.
    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).

    Comment


      #3
      Thanks for the advice. Yes I have read many conflicting stores regarding carpet too but I'm assuming if I can prove the carpet is not fit for purpose with photos and can provide receipts I don't see why it would be an issue. I would have professionals carrying out the maitanence work for me.

      Comment


        #4
        Until this April carpets were excluded because they were furnishings and claiming for furnishings wasn't allowed in unfurnished property.
        That has now changed (even though the law to make the change is not in effect, as far as I can see).
        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).

        Comment


          #5
          You should also bear in mind that things can go wrong with this plan. I'm sure everyone would like to get tax relief on refurbing their home prior to sale, but we now have a new Chancellor and tax rules could change. In addition you could easily get a tenant that trashes the place costing you £many to put right or refuses to leave at the end of their tenancy, or there could be a delay in the sale of your existing property that takes you over the 18 month limit for reclaiming the additional SDLT. Its probably worth running the numbers on different scenarios to make sure this is really worth it. For me, with all the risks and complexities of letting at the moment, it wouldn't be.

          Comment

          Latest Activity

          Collapse

          • Caught out by changes to Capital Gains Tax
            by reluctantlandlord1976
            I appreciate 'ignorance' is no excuse, however there are some mitigating factors, i.e. due to illness etc.

            1. Previous family home rented out - terrible tenants - left owing rent, bad repairs etc. [usual story for some] subsequently property not let for 2 years for a number of reasons while...
            06-12-2021, 13:51 PM
          • Reply to Caught out by changes to Capital Gains Tax
            by reluctantlandlord1976
            Thank you Gordon, didn't see your response this afternoon. I will look at this with fresh eyes tomorrow as it's late now.
            I've put some figures in my reply to a post just now but answers below to your questions.

            a] £80k Jan 2021 sale price.
            b] As property purchased before...
            08-12-2021, 00:55 AM
          • Reply to Caught out by changes to Capital Gains Tax
            by reluctantlandlord1976
            Andrew, apologies only just seen your post [was it awaiting approval did you say?] answers are:

            Purchased March 1982 as joint tenancy - so equal split of 33 1/3% each party
            Parent 2 died September 2007 - as joint tenancy I inherited their share - so at this point I own 100% of property...
            08-12-2021, 00:41 AM
          • Reply to Caught out by changes to Capital Gains Tax
            by reluctantlandlord1976
            JP Keates
            I wasn't aware that refurbishment deductions only applied in terms of letting out the property. On the CGT calculator it asked 'How much have you spent on improvements since you became the property owner'.....

            Here's the timeline:

            March 1982 - 1992 3 Owners,...
            07-12-2021, 18:01 PM
          • Reply to Caught out by changes to Capital Gains Tax
            by reluctantlandlord1976
            JP Keates et al - thank you very much for your assistance. I have this afternoon emailed an accountant to try and get an appointment urgently. I hadn't realised it was all so complicated and it was remiss of me to not be aware of the CGT changes made in 2020 due to not renting out the property. Thanks...
            07-12-2021, 17:28 PM
          • Reply to Caught out by changes to Capital Gains Tax
            by jpkeates
            Refurbishment while you were living there is only allowable against CGT if it was solely and exclusively for the business, so if it was to prepare the property to be let, it would be OK.
            If it was simply to improve what was then your home, it fails the basic test.

            Get yourself to...
            07-12-2021, 16:22 PM
          • Reply to Caught out by changes to Capital Gains Tax
            by AndrewDod
            The probate resets a lot of the stuff, but my main response was unapproved
            07-12-2021, 15:36 PM
          • Reply to Caught out by changes to Capital Gains Tax
            by AndrewDod
            You are really short on detail:

            Date (year & month) bought in joint names ______ (what % was yours then)
            Date it converted to your sole name ______ (presumable date of death of parent 2?)
            Declared vale at probate _________
            Capital expenses between date of probate 2...
            07-12-2021, 15:33 PM
          • Reply to Caught out by changes to Capital Gains Tax
            by reluctantlandlord1976
            We were all joint owners. Bought it with parents. I lived there for 10 years before buying own home. I became sole owner upon their deaths. Rented out since 2007-2019. Empty last two year as trying to sell. Hence I was off the landlord radar. I am now extremely worried by your statement that refurbishment...
            07-12-2021, 14:53 PM
          • Reply to Caught out by changes to Capital Gains Tax
            by AndrewDod
            Let us know the exact timescale and money involved year by year - I am sure some kind person (or even myself) with do a calculation for you so that you can assess the risks involved
            07-12-2021, 14:33 PM
          Working...
          X