Hello,
A few years ago, I embarked on a private house refurbishment project for a profit. For personal reasons, I incurred substantial losses on completing the project meaning I only recovered part of what I invested and had no profit. I entered the money, on the tax return, each year as a loss as I would not recover any money (and get a profit) until I sold the house. It took me 3 years. In tax returns:
Year 1: loss of £127,000 (all the money I invested in buying the house and refurbishment costs)
Year 2: loss of ££18,000 (refurbishment costs)
Year 3: loss of £12,500 (refurbishment and maintenance)
Year 4: received only £65,500 from the sale of the house (not profit, just what I recovered of the investment). This is what I need to enter in the tax return for the year.
Obviously, I do not want to end up paying tax on that money as if it was a capital gain. How do I relate it to the previous money I invested?
Thanks.
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