Capital Gains Tax Reurn

[Ford5610]

Hi all,

We have to do a capital gains tax return for a sale of a house.

We paid a deposit on the house in February 15 in order to buy it but the sale didn't go through until Nov 15.

We were working on the house doing improvements from February as we knew the seller etc. The house was in bad condition and needed a lot of work.

The expenses we incurred during that time, can they be offset against the Capital gains?

or is it from the date of sale of house went through? or date we became owners?

I need some advice as there was lot of costs incurred.

Thanks in advance for the advice.

+

 

[Joe_90]

You bought a house in Nov 15 that you did up and sold at a profit within 12 months?

As a rule the expenditure on the property will qualify as a deduction from CGT.

So the price paid, stamp duty and construction expenditure.

Are you related to the vendor?

 

[T McGibney]

There is a risk that a purchase, renovate and sell project such as this, particularly if completed within a narrow timescale and/or by someone in or connected to the construction industry, may be subject to income tax as a trading activity and may also carry attendant VAT & RCT implications.

Sounds like you need appropriate professional advice.

 

[Ford5610]

thanks for your replies.

Not related to vendor. we bought a house beside us with land that was for sale. We are keeping the land and sold off the house.

There was no major construction work done. it was all by ourselves. We got Ranch railing put up and gates, tress cut down etc. we done all painting ourselves and all the internal work as in cleaning etc.

My main question is, we started the work once we paid the deposit, can the receipts we spent on the house be claimed before we actually became the owners?

Thanks

 

[T McGibney]

My main question is, we started the work once we paid the deposit, can the receipts we spent on the house be claimed before we actually became the owners?

Yes, why not?

I reckon you still need professional advice, particularly if the sums in question are in any way significant. For example this suggests a part-disposal computation is needed:

Not related to vendor. we bought a house beside us with land that was for sale. We are keeping the land and sold off the house.

There may be other hidden issues.