Future Capital Gains on renovated house

J

JohnDoe

Guest
Hi,

I'm purchasing a house. The purchase price is 220k. I will have a mortgage of 170k. The house requires a fair bit of money to be spent on it (about 30k) as it is a shell. This money will be my own cash.

My questions are if/when I come to sell the house will my Capital Gains (if any!) be calculated against the 220k or the 220 + 30k? i.e. Would I pay capital gains on the selling price minus 220 or the selling price minus 250?

Thanks
 
You really need to elaborate more, to get the direct answer;

How long after purchase do you intend selling?

Is it your PPR?

Do you intend renting it prior to selling?
 
Apologies for the lack of detail. It will be my PPR. I don't intend to rent but can't be certain that this wouldn't change. I don't know when I would resell - I'm just trying to figure out the whatifs and don't understand how the money spent on the house in addition to the purchase price would later be proven. I'm taking photographs of the house before and after the refurbishment but is this sufficient?
 
If it's your PPR - no CGT will be payable.

If it's not your PPR the money you spend on renovating it will be taken into account as enhancement expenditure, effectively increasing the cost price and subsequently the taxable gain.

If you rent a room in the house you may be able to claim rent a room relief

If you live in the house for say 2 yrs and then rent for 2 yrs - you will get an element of PPR relief when you sell.

Hope this explains
 
Does this man that the enhancement /renovation expenditure can be set off against the Capital Gain payable ?
 
Good luck with turning a "shell" into a finished house for 30k by the way!
 
Does this man that the enhancement /renovation expenditure can be set off against the Capital Gain payable ?
Click to expand...

I've given you too much information.

The basic answer to your original question is that it will be the 250K and not the 220K that will be taken from the selling price
 
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