Capital Gains Tax

We bought a house as an investment in 2006 (just the wrong time!!)#
We have found a buyer ourselves and our now selling.
We understand Capt. Gains tax @20% is due on the 'profit' but are getting varying answers as to what we can deduct.

We understand we can allow for Solicitors fees on purchase and sale, also Stamp Duty pd on purchase, but can we allow for fixtures and fittings ie. flooring and burglar alarm. We are selling fully furnished down to kettle and toaster but one person told us we cannot claim for that must be a separate contract for contents and that Rev. might not allow it anyway.

Anyone have any experience of this??

There are several thread on this topic already. But you should also get independent, professional advice since you are not sure how to prepare the correct CGT return.

You cannot split contracts for house and contents for tax avoidance purposes in the way that you suggest.

adsam said:

We understand we can allow for Solicitors fees on purchase and sale, also Stamp Duty pd on purchase,

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Are you sure you can write off Stamp duty against CGT?
I built a house on a site I bought and sold on the house recently, and my accountant said he couldn't claim Samp duty on the purchase of the site

willbee said:

Are you sure you can write off Stamp duty against CGT?

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Yes.

7. Cost of Acquisition

• Incidental costs of acquisition such as legal fees and stamp duty are allowable as part of the cost.
• ...

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Maybe different rules apply in your case (i.e. separate site purchase and house build)?

adsam said:

We bought a house as an investment in 2006 (just the wrong time!!)#
We have found a buyer ourselves and our now selling.
We understand Capt. Gains tax @20% is due on the 'profit' but are getting varying answers as to what we can deduct.

We understand we can allow for Solicitors fees on purchase and sale, also Stamp Duty pd on purchase, but can we allow for fixtures and fittings ie. flooring and burglar alarm. We are selling fully furnished down to kettle and toaster but one person told us we cannot claim for that must be a separate contract for contents and that Rev. might not allow it anyway.

Anyone have any experience of this??

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You would not be liable to CGT on the contents i.e. they are wasting assets. So if the sale includes contents get a valuation for the contents put into the contract (the purchaser will want this also to reduce amount chargeable for stamp duty).

Other things which can be deducted are:
Legal costs on purchase and sale
Auctioneers fees on sale
Stamp duty on purchase
Enhancement expenditure e.g. costs of building an extension (this does not include repairing or maintenance costs).

ClubMan said:

There are several thread on this topic already. But you should also get independent, professional advice since you are not sure how to prepare the correct CGT return.

You cannot split contracts for house and contents for tax avoidance purposes in the way that you suggest.

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Clubman could you provide the reference for the above idea of not being able to split contracts?

From a tax perspective on an investment property that was rented out, the individual is going to have capitalised the fixtures and fittings for the purposes of capital allowances on rental income. So if a portion of the contract in not allowed for the fixtures and fittings then the individual is, in theory, entitled to claim a balancing allowance on these fixtures and fittings as he/she has sold the items at no consideration therefore he/she can claim a balancing allowance for the T.W.D.V of them and then offset against other rental income.

There has be numerous cases with regard to this area, notebly by one infamous Tax Consultant. My opinion on the matter is that it is still quite a grey area and that if the contract provides specificly for the F&F then the contract can be split.....

Iceman732 said:

Clubman could you provide the reference for the above idea of not being able to split contracts?.

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I am going by many previous threads/discussions on this topic. Obviously anybody who needs to know for sure about if/how their own specific situation fits into this needs to get professional advice.