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Where Taxpayers and Advisers Meet

Cost of Property, PPR+Lettings Relief + CA + tax rates

ritz13
Posts:22
Joined:Wed Jan 02, 2019 4:54 pm
Cost of Property, PPR+Lettings Relief + CA + tax rates

Postby ritz13 » Sat Jan 23, 2021 12:47 am

Hi Guys

I have a few questions on a property that we've lived in as main residence, left empty and rented out over time - that we are looking to sell.

If you've had a property for 15 years over which you've incurred additional costs of around £50k but don't have receipts to back up half of that, can you still reduce this off the sales price of your property when calculating CGT? We've had the property for some time and we have photos to back up how run down it was when first purchased to show the amount of work that went into repairing it. It was such a long time ago and most of the work was done at the start to get the property in decent condition but we've lost quite a few big value receipts.

I understand that HMRC have reduced the principal private residence relief on last 18 months to just 9 months when selling your property - do we factor this into our calculations on CGT if we were to make a sale before April this year?

Has Lettings relief been abolished too, (if we didn't share our property with tenants) so we can't deduct this either if we were to make a sale before April this year?

We are joint owners - do we both get £12,300 Capital Allowance - so £24,600 in total. Or can we only deduct £6,150 each (half of £12,300) ...?

Also one of us is a basic rate tax payer and the other higher rate tax payer. Would it be tax efficient if we were to change the percentage ownership so that the basic rate tax payer owns a higher % of the property - before selling the property? And if so, how long would it usually take to change the percentage ownership?

Thanks. Any help much appreciated.

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: Cost of Property, PPR+Lettings Relief + CA + tax rates

Postby AdamS93 » Sat Jan 23, 2021 10:10 am

Any improvement costs can be included. If HMRC checked the return, they would want to see some evidence (photo's, invoices, bank payments etc).

Yes, you only get PPR relief for the final 9 months of ownership.

No more letting relief from 6th April 2020

Each taxpayer gets an annual exemption of £12,300.

You will need to complete a CGT return within 30 days of completion of sale.

ritz13
Posts:22
Joined:Wed Jan 02, 2019 4:54 pm

Re: Cost of Property, PPR+Lettings Relief + CA + tax rates

Postby ritz13 » Sat Jan 23, 2021 2:13 pm

Thanks very much Adam, so for the improvement costs do you mean that if we don't have the receipts - evidence such as photos, and bank statements showing payments made will be ok?

Also, something else just I was wondering if you could please advise us on

One of us has another property he is paying a mortgage on - would he be able to reduce his CGT by transferring the gain to help pay off some of his mortgage?

cheers

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Cost of Property, PPR+Lettings Relief + CA + tax rates

Postby bd6759 » Sun Jan 24, 2021 1:23 pm

Responsibility rests with you to show that you have incurred the cost. Photos do not demonstrate that. They are not evidence of the cost.

Repairs are not allowable costs: only enhancement costs. A repair brings something back to the standard it originally was. An enhancement makes it better than it ever was.

There is no reduction for reducing another mortgage, or for any application of the funds. What you spend the proceeds on is irrelevant.


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