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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am trying to work out my taxable gain on a BTL property

Customer Question

I am trying to work out my taxable gain on a BTL property that I purchased some years ago and sold last year. During the period I owned the house I spent a load on it. I put a complete new roof as the old one was leaking badly, new upgraded modern kitchen
and bath room , installed a complete central heating system as there was none there when I purchased it and changed all the windows and exterior doors for UPVC double glazed units. There is no doubt in my mind that the sale price was considerably higher because
all these improvements had been made. Can I deduct the cost of all these improvements from the gain in order to reduce my CGT liability.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

Let me take a look at this and I'll get back to you.
Customer: replied 1 year ago.
OK thanks
Expert:  TonyTax replied 1 year ago.
Hi again.
Basically, any costs incurred which significantly improve a property can be classed as capital as opposed to revenue expenditure, though its not a hard and fast rule. Today, HMRC will allow the cost of double glazing to be claimed as a revenue expense, for example. Take a look at the link below for more information:
http://www.hmrc.gov.uk/manuals/pimmanual/pim2020.htm
Assuming that you didn't claim any of the items mentioned against your rental income, then I would claim them as improvements when calculating the capital gain. HMRC may ask to see proof of the expenditure.
I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
I would say that all these are improvements but whether they are significant its a matter of interpretation I suppose. The only thing I did as an addition was to put in the central heating system as there was none there when I purchased it. Some might argue that all the other stuff was just putting back like with like all be it with modern equivalents, its a difficult one. In their own manuals they site the building of as an extension as an improvement/upgrade of a home. I can provide proof of expenditure as it was all done by outside contractors. I was aware of the double glazing upgrade that can be put against revenue expenses, but not both I suppose.
Expert:  TonyTax replied 1 year ago.
Where central heating is put into a property for the first time is an improvement. If I were you, I'd claim everything you mentioned. The declaration of the gain in your tax return may never be queried by HMRC and I doubt you would have any problems over what you have claimed for.
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