Dear All,
I have recently sold a buy-to-let property and have to pay CGT on any profit. 18 months ago a tenant accidentally set fire to the property. After the fire, the property was worth much less than I bought it for. I spent £70,000 refurbishing the property and sold it for about £20,000 more than I bought it for.
(a) Am I right in thinking that I can deduct £70,000 as an expense from the CGT calculation?
(b) I was insured against fire, and received an indemnity of £70,000 from the insurance company. Does that change the calculation? Am I obliged to pay CGT on any monetary increase obtained as a result of my purchasing an insurance policy for my benefit? (My gut feeling is that, since I paid the insurance premium, I should get the benefit, not HMRC.)
Thanks in advance.
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