CGT allowable offsets

I recently sold a rental property inclusive of all contents and am in the process of filing my tax returns for the year.

Prior to the sale I was advised to replace the boiler and to spruce the place up with a number of new items such as a fridge and settee as the old ones were in a poor state of repair.

Normally I would claim the cost of the boiler as a repair in full against my rental income and 12.5% of the fridge and settee costs under capital allowances.

Should I still do this now or should I look to offset these costs against the capital gain which was made from the sale?

I also have some unclaimed capital allowances from the previous 7 years, can these unclaimed balances be used to offset the capital gain as the associated items were included as part of the sale as I cant avail of them as capital allowances going forward.

I also replaced a front door some years ago due to wear and tear and claimed the cost in full as a repair in that years tax return. Can i now also include the cost of this new door to offset the capital gain from the sale?

LL???? said:

Normally I would claim the cost of the boiler as a repair in full against my rental income and 12.5% of the fridge and settee costs under capital allowances.

Should I still do this now

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Yes

LL???? said:

or should I look to offset these costs against the capital gain which was made from the sale?

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No. It's not an improvement to the property. You've merely replaced a worn-out boiler with a new one.

LL???? said:

I also have some unclaimed capital allowances from the previous 7 years, can these unclaimed balances be used to offset the capital gain

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No

LL???? said:

I also replaced a front door some years ago due to wear and tear and claimed the cost in full as a repair in that years tax return. Can i now also include the cost of this new door to offset the capital gain from the sale?

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No, for the same reason as with the boiler above.

T McGibney said:

Yes

No. It's not an improvement to the property. You've merely replaced a worn-out boiler with a new one.

No

No, for the same reason as with the boiler above.

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Thanks for the prompt reply and I get what you are saying, however if the house was sold without contents the sales price would have been lower, which in turn would have reduced the gain that was made, so on that premise can the cost associated with the contents (tables, chairs, beds, fridge, freezer, washing machine, dryer, etc) not be taken into account as an offset against the gain made?

LL???? said:

Thanks for the prompt reply and I get what you are saying, however if the house was sold without contents the sales price would have been lower, which in turn would have reduced the gain that was made, so on that premise can the cost associated with the contents (tables, chairs, beds, fridge, freezer, washing machine, dryer, etc) not be taken into account as an offset against the gain made?

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It may be possible to agree a separate deal for the contents? Or you can bring them with you?

LL???? said:

Thanks for the prompt reply and I get what you are saying, however if the house was sold without contents the sales price would have been lower, which in turn would have reduced the gain that was made, so on that premise can the cost associated with the contents (tables, chairs, beds, fridge, freezer, washing machine, dryer, etc) not be taken into account as an offset against the gain made?

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There are both CGT and Income Tax implications to the approach that is taken in respect of contents, where the property being sold is a rental property with contents that are being written down by capital allowances.

If your sale of the property, is at a price that includes an amount in respect of the contents, then the contract for sale should include some breakdown, or at least an aggregate sum, of the amount being attributed to the contents. This allows you to calculate any balancing allowances / charges for income tax purposes, and it also means that your CGT liability will be slightly lower, as the contents are separate assets, and exempt from CGT as wasting chattels.

If the contract doesn't specify an amount in respect of the contents then this means that all of the sale price is for the property itself (subject to CGT in your hands but increasing the base cost of the CGT asset for the purchaser), and presumably for income tax purposes you would have a balancing allowance for the remaining unused capital allowances in relation to the contents, since they have been disposed of for nil.