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Where Taxpayers and Advisers Meet

CGT. Second home cost basis without invoices

Eloc2023
Posts:3
Joined:Sat Nov 18, 2023 10:48 am
CGT. Second home cost basis without invoices

Postby Eloc2023 » Sat Nov 18, 2023 10:57 am

I am selling my second home. It will sell for approx 750k. I purchased for 180k 20 years ago. So there will be a large capital gain. The issue I have is that during the first few years of ownership (during 2004-2008) I spent about 200k totally remodelling it from a “wreck” to a “grand design”. Unfortunately today I have very few invoices to evidence these expenses. Perhaps only 1/4 of them (Yes, I am an idiot!). The work was done by a large number of different small tradesmen and different companies and over a period of 4-5 years. It was not a single large contract with one company. This work completed more than 15 yrs ago and today I hold very few of the invoices and its unlikely after so long that I can approach the original companies to re-issue invoices from so long ago.

However I do have extensive photos that show a terrible wreck being converted into a beautiful home, including 2 extensions. It is obvious that the work involved some major capital expense.

In the absence of the old invoices, is there any other mechanism that can be used with HMRC (supported by photos) to argue a fair cost basis that comes somewhere close to my true capital costs?

Thank you in advance for any comments.

bd6759
Posts:4239
Joined:Sat Feb 01, 2014 3:26 pm

Re: CGT. Second home cost basis without invoices

Postby bd6759 » Sun Nov 19, 2023 12:13 am

You can deduct the enhancement costs you incurred.

There is no mechanism. It is up to you to demonstrate that you incurred the costs you say you incurred. Maybe your tax returns around that time will evidence that you had the spare cash to fund it.

wamstax
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Re: CGT. Second home cost basis without invoices

Postby wamstax » Sun Nov 19, 2023 3:42 am

If you had 2 extensions then would you also have applied for planning permission and could you approach the Planning authroity to see if you can get the original permission with estimared costs.
regards and hope this helps
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Eloc2023
Posts:3
Joined:Sat Nov 18, 2023 10:48 am

Re: CGT. Second home cost basis without invoices

Postby Eloc2023 » Sun Nov 19, 2023 12:39 pm

I actually kept a detailed log book of all the expenses and I still have this book with hundred of line items. Its just most of the invoices that are now missing. So I do have an accurate understanding of the cost items, dates and thus the total cost incurred.

Bd6759
Are you saying that I should simply go ahead and claim the true costs incurred?… even if it is hard to demonstrate the evidence today, I should just enter the true capital amount that I spent? Given that I did honestly spent these amounts, the evidence once existed… although bank statements etc are not easily accessible from 15-20 yrs ago.

Wamstax
I can certainly point to the 2 planning permissions granted and also to 3 building control applications, all inspected and signed off. But I have never before seen the concept of getting cost estimate data from a Local Authority. It is implicit only, in that it is just more proof that the work was carried out. Eg a signed Completion Certificate from Building Control for an Extension. But photos surely demonstrate that even moreso.

bd6759
Posts:4239
Joined:Sat Feb 01, 2014 3:26 pm

Re: CGT. Second home cost basis without invoices

Postby bd6759 » Sun Nov 19, 2023 1:42 pm

If you have a contemporaneous record of the costs incurred, that is evidence. Collaboration is always useful, but an accurate record, which you are willing, under oath, to attest is correct is sufficient unless HMRC can disprove it.

Eloc2023
Posts:3
Joined:Sat Nov 18, 2023 10:48 am

Re: CGT. Second home cost basis without invoices

Postby Eloc2023 » Sun Nov 19, 2023 5:21 pm

Bd6759
Thank you for your comments. Much appreciated.


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