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Where Taxpayers and Advisers Meet

CGT allowance with no receipt

Joined:Wed Aug 06, 2008 3:46 pm

Postby Rockydell » Wed Nov 29, 2006 5:03 am

Hi everyone,

I'm new to this website and wishing I had discovered it earlier! I now have a question that someone may be able to give some information on.

We have a second property which we acquired about 3 years ago for a good price because it was in a bit of a state. In a nut shell, the intention was to help get a relative on the property ladder. Them buying it when they are able to, if not we rent it or sell it.

It looks like we missed a trick by not registering this as a potential (?) primary residence in the first 2 years, so whenever we sell, it will be subject to CGT.

During our period of ownership we have had a garage built. Lovely job, 90% done, 90% paid for, builder went bust and disappeared, finished it ourselves. Unfortunately no final receipt/invoice/whatever.

Whenever we sell the house the garage obviously adds value. So what happens in a case like this when it comes to paying CGT and we want to deduct the price paid for the improvements from the taxable amount?

Is it a case of: Tuff luck - No receipt no deduction? Or does the tax man acknowledge that garages don't get built for nothing and allow some sort of deduction based on a typical cost or something?

Thanks for any info


Joined:Wed Aug 06, 2008 3:15 pm

Postby Instinctive » Wed Nov 29, 2006 7:26 am

(1) Second property cannot be registered as only or main residence unless it was actually used to live in.

(2) If you let the property for say 6 months, and then start using it as your home, another 2 period begins for nominating it as your main home.

(3) You must have some other evidence of how much the garage has cost you to build, for example, monies drawn from a bank to pay the builder, diary notes etc. You can take account of the cost of all improvements in the CGT calculation but you may be asked to substantiate this to the tax inspector or, on appeal, to the General Commissioners.


Bob Jones
Joined:Wed Aug 06, 2008 3:43 pm

Postby Bob Jones » Wed Nov 29, 2006 8:28 am

Justification where there is no documentary evidence is a common problem. As Ramnik says you must have something to justify at least some or most of the expense. If it comes to the worst - ie you have a problem with the tax inspector, and you have genuinely paid £x, and you find yourself listed for hearing before the Commissioners then produce what evidence you have and offer to swear on oath that the actual expenditure was the amount claimed.


Joined:Wed Aug 06, 2008 3:46 pm

Postby Rockydell » Wed Nov 29, 2006 3:15 pm

Yes, I do have old bank statements on which I identified several large withdrawls as being for garage building work. These add up to the total cost paid and they coincide with the period over which it was built. I guess this would count as reasonable evidence in the absence of solid official proof.


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