Hi,
I'm hoping someone can help with this (a bit of background first):
2005 - residential property with sitting tenant inherited by a person who has no other rental properties. Property isn't in good repair.
2005-2019 - Same tenant stays, and won't let landlord do any work to the property. Property condition gets worse and worse.
2019 - tenant leaves to go into a care home
2019/20 - landlord spends multiple £10ks to renovate property with a view to selling
2020 - property marketed for sale for 6 months, but no sale achieved, so taken off the market
late 2020 - new tenant found, although landlord still wants to sell soonish.
Landlord has no other properties.
Most of the renovation costs incurred in 2019/20 are repairs and replacement, and therefore revenue expenditure, rather than capital. This would result in a large loss in 2019/20 which can't be relieved against other income, and must be carried forward against future rental profits - however, if the property is sold in the next couple of years, these losses will be lost. My question is, as the landlord was unable to do any work to the house when first inherited, could the renovation costs be deemed to be enhancement expenditure for CGT purposes, rather than being claimed as revenue costs?
Hoping that this makes sense and that someone can help! Thanks so much in advance...
Pondertax
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