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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5515
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
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I need to submit a return for the sale of a property

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I need to submit a return for the sale of a property purchased by a council and wanted to know what expenses are deductible
Assistant: Which tax year is the deduction for?
Customer: The property was sold in 2015
Assistant: Anything else you want the Accountant to know before I connect you?
Customer: I did extensive renovations on the property and wanted to know what I could deduct from the sale price and if compensation paid for the purchase is taxed at the same rate.

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Many thanks

Customer: replied 6 days ago.
Thank you.

Thank you for your question..

You say the property was sold in 2015.

It depends on the nature of compensation .. please expand on why you received compensation. If you were paid compensation to vacate the property , it would be added to sales consideration and form part of your gain. This would be taxed at your CGT rate.

Renovation of a capital nature i.e. replacement of all windows/doors, reroofing, modernisation of whole bathroom etc would be deductible from the 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.

Customer: replied 6 days ago.
The house was to be compulsory purchased but a sale was agreed with the council. the property was let at the time and 7.4% compensation was paid.
Customer: replied 6 days ago.
The renovation was two new bathrooms built and an extension for new kitchen as well as gas central heating and installation of gas supply.
Customer: replied 6 days ago.
Would I also be able to include remedial work for subsidence?

Thank you for your reply.

It appears compensation was for loss of rental income and this would be treated as income and subject to income tax.

The expenses outlined by you would be deemed capital improvement and deductible from capital gain. Remedial work for subsidence is also capital spend and deductible.

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