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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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We bought the cottage adjoining our house in 2000 in order

Resolved Question:

We bought the cottage adjoining our house in 2000 in order to extend our living accommodation. It is not rented out or used for business but it is rated separately. Will Capital gains tax be due when we sell. We intend the to sell the two nominally separate properties as one.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.

Hello and welcome to the site. Thank you for your question.

If the adjoining cottage is a stand alone property, rated separately and could be sold on its own, then any gain from sale of it would be chargeable to capital gains tax unless it is an integral part of the property you are living in and now cannot be separated.

You would be able to deduct costs associated with buying and selling the property from the gain and also claim the gains allowance before arriving at chargeable gain.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

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Customer: replied 2 years ago.

Thank you for your helpful reply. Does the cost of servicing the mortgage count as as "costs associated with buying" ?

Expert:  taxadvisor.uk replied 2 years ago.

Eleanor, thank you for your reply.

I am sorry to say the answer is no. If you had let the adjoining property then it would be an allowable expense against the rental income.

Interest on loan for private use is outside the scope of tax allowance/relief.
I was referring to agents fees, Lawyers fee, stamp duty and survey fees etc as being costs associated with buying.

I hope thsi is helpful and answers your question.