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Where Taxpayers and Advisers Meet

Capital allowances

Joined:Tue Dec 16, 2014 8:20 am
Capital allowances

Postby kanrent » Mon Sep 06, 2021 1:14 pm

Hi when I sell my rental property I will have to pay CGT.
How do I claim tax relief on improving the property? for example I had a fitted kitchen installed where the was none before.
Do I have to claim/report the amout on my annual self assessment tax return (property income sa105 box 35.
Or do I just keep the receipt and claim it when i sell the property and complete the CGT summary page.

Joined:Mon Mar 11, 2019 4:22 pm

Re: Capital allowances

Postby Jholm » Mon Sep 06, 2021 3:18 pm

Firstly you need to be comfortable with the difference between revenue expenditure and capital expenditure. When researching, be careful because capital allowances (as referred to in your title) are not the same thing.

The kitchen for example would likely be a capital improvement, since you say it had no kitchen before (although that seems quite odd if I can say so!). If so, this would be shown as a cost for capital gains purposes, together with your purchase price and other allowable costs.

If however, you previously claimed the kitchen against rental income (whether rightly or wrongly, dependant on facts), then you would be double counting it by including it in the capital gains tax computation.

The sale would be reported firstly via the 30 day return and then your tax return. It appears as capital gain so not under the usual property pages. You would of course report any rental income and expenses on these pages, if there were any in the tax year of sale.

Joined:Tue Dec 16, 2014 8:20 am

Re: Capital allowances

Postby kanrent » Mon Sep 06, 2021 5:05 pm

I didn't claim the kitchen against rental income anywhere on my annual tax return because I assumed it was a capital expenditure, because the rental property was in a bit of a state and had no kitchen and needed one to rent it out.
I was worried that I might need to report the upgrade on my annual tax return

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