Postby maths » Fri Mar 13, 2020 2:06 pm
The issue is whether the allocation of part of the land purchased for the self-build to one of the buy to lets may qualify for "enhancement expenditure" treatment ie can its cost be treated as part of the base cost of the buy to let when sold.
I suspect not. For enhancement treatment it is necessary for the cost of the land allocated to the buy to let to satisfy TCGA 1992 s 38(1)(b), namely,
"...the amount of any expenditure wholly and exclusively incurred on the asset by him or on his behalf for the purpose of enhancing the value of the asset...."
The expenditure incurred was not (HMRC may argue) "wholly and exclusively incurred ....." because the purpose of the expenditure was to acquire the land for the purposes of a self-build.