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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I sold a buy to let property, but reinvested in a holiday let

Resolved Question:

I sold a buy to let property, but reinvested in a holiday let property in the same tax year. Is the sale of the first property subject to capital gains?
If so, can I offset improvements (new kitchen, bathroom, double glazing) against the gain?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.

Hi.

I'm afraid that the buy to let property you have just sold is not classed as a business asset which means that you cannot rollover the gain into the purchase of the holiday let property, thereby deferring the CGT charge. You will need to disclose the gain or loss.

The costs of improvements made to the property can be taken into account in calculating the taxable gain. These days, HMRC will allow the cost of replacement double glazing to be claimed against rental income, especially if it is replacing existing double glazing. If you didn't claim it that way, then claim it as an improvement. Take a look at the notes here.

I hope this helps but let me know if you have any further questions.

Customer: replied 3 years ago.

Thank you, XXXXX XXXXX confirm, the new kitchen and bathroom can be offset against the capital gain?

Expert:  TonyTax replied 3 years ago.
If they are improvements on what was there before, then the answer is yes you can claim for the costs of the new kitchen and bathroom.
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