This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our privacy notice.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Marketing

A bit of data which remembers the affiliate who forwarded a user to our site and recognises orders from those who become customers through that affiliate.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Enrol now on the free landlord tax strategies course


To enrol in the 7 tax saving strategies email course complete the form below. The first module will be emailed to you immediately.

Enrol now on the free landlord tax strategies course

Thank You!

Free Tax Saving Strategies Course
The seven FREE property tax busting strategies course reveals the secrets of how to legitimately beat the taxman and boost your property profits!
View All Questions

Can I offset the cost for extending the property lease?

Question

I have purchased a property for £95000 in 2000. Afterwards I was living in the property for two years and have gradually renovated the place. I also bought a lease extension to increase the lease from 74 to 164 years. Before letting it out two years after purchasing it, I re-mortgaged and the property was valued £170000.

When I sell the property will I be liable for CGT of £75000 even though I increased the value through my renovation? Also, can I offset the cost for the lease extension (£15000)?

 

Arthur Says

Firstly, if the property renovations have been of a ‘capital nature’ i.e. they have increased the value of the property then they can be deducted from the final selling cost.

 

Secondly, the cost of the lease extension is an allowable expense for CGT purposes – see the Inland Revenue Manuals page CG 71401.

 

Thirdly, because you lived in the property, principal private residence relief and private letting relief will be available to reduce the gain.

 

Non business asset taper relief will also be available, and probably the CGT annual exemption also.

 

So the final assessable gain is likely to be a lot less than £75,000.

 

Case Study

Landlord Tax Secrets Get our SEVEN FREE Landlord Tax Saving Strategies - Guaranteed To Slash Your Property Tax Bills!
Click here for more.

Got a burning tax question?

Why not submit a tax question to our tax advisors

Ask a Question