CGT and PRR question

[vik2001]

hi
im going to sell my property and needed some tax advise on what I can claim, heres a simple breakdown:

Property Purchased in Dec 2007 for £250k
Property Sold in July 2017 for £410k

I lived in the property from Dec 2007 till 2011 (3 years)
I renovated the property which included major works from 2009/2010. Can I claim for this expense when selling the property now even though it was not on rent during this time?

Can I also claim any PRR or Lettings relief, I have no idea how to work this out?

In 2012 till 2017 I rented out the property, and paid rental income tax accordingly during this period.


So can I claim as part of the CGT the following:
House expenses when purchased 2007-2011 (I was living here during this time)
-House refurbishment 46k
- Solicitors fee and stamp duty 3.9k
- Mortgage fees 1k
- Can I claim the above and PRR ??

House expenses when selling in May 2017:
Decorator and repairs, change of carpets required when tenants moved out - 4k

thanks

[jpkeates]

If the renovations were preparing the property for rent, they're allowable as capital expenses incurred as part of the business.
If they were simply improvements while you lived in the property, they're not.
HMRC would be interested in the exact timeline, as the work was complete some time before you let the property - which argues for them being unrelated to the business.

The mortgage fees are a revenue not a capital expense and should have been claimed against income.
Same with the decorating repairs and carpet.
The solicitor's fees and stamp duty are allowed against the capital gain.

You simply spread the whole gain (less the allowed costs) over the period of ownership and deduct the proportion that occurred while it was your private residence (plus 18 months).
The gives you your taxable gain, from which you deduct your personal allowance for capital gains tax.

Letting relief is calculated as the lowest of the taxable gain, the non-taxable gain or £40,000.00.

[Gordon999]

I would suggest the £46K spent on refurbishment be split say £10K redecoration and £36K for property improvement.

Then your capital gain over 10 years may be approx : £410K - £250K -£3.9K - £36K = £120K

You can claim 3 years + 18 month for period under owner occupation = 120 x 4.5 /10 years = £54K exempt from cgt.

The taxable gain = £120K- £54K = £66K . and you can claim up to £40K lettings relief and £11K personal capital gains allowance.

So you may be taxed on £66K - £40K - £11K = £15K taxed at 18% or 28%

This is only my guess . Please consult a tax accountant for correct advice.

[vik2001]

thanks for the advice guys.
can I claim loss of rent or mortgage payments after the tenants left. the property was vacant for 3 months till it was sold...

[jpkeates]

No, they're not allowable - you can still claim the interest on the mortgage, three months is fair enough.

[vik2001]

Many thanks for the reply mate.
Heres a different scenario I just wanted a answer for, ignoring all the above scenario:

Say I have a rental property on rent for 5 years, lets say in year 2, it was vacant for 9 months and I moved into it. During this time I only moved into it as my main residence so I could get it renovated, with the intention of moving back out so it could go on rent.

Renovation improvements cost was £20,000.
Can I claim it was my main residence during this 9 months and get PRR and lettings relief, as well as putting the improvements cost 20k against it?
After the improvements were done I moved out and the property was back on rent till I decided to sell…..

Thanks.

[Gordon999]

£20K of improvements is a capital cost and can be claimed against capital gain after the property is sold..

[vik2001]

but can I also claim with the 20k of improvements any residential relief/ lettings relief as I went back in for 9months while it was being renovated?

[Gordon999]

I think NO but you should ask the hmrc tax office to give advice on your enquiry.