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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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In 2003, I bought a house in Birmingham for my daughter whilst

Resolved Question:

In 2003, I bought a house in Birmingham for my daughter whilst at University. I took a mortgage on my main residence in Watford, so paid cash for the Birmingham house. I put it in my daughter's name (but with my name as having an interest, in the belief(?) that I would avoid capital gains tax when we sell.
In 2012, my daughter independently bought her own property.
I also hoped that Birmingham would be a good investment for my retirement but bad tenants have been a nightmare (cannabis factory etc!) so after a huge repair effort and cost we have decided to sell.
What is the CG tax position please? Can I deduct anything for the repairs?
Thanks in advance.
Graham W.
Submitted: 10 months ago.
Category: UK Tax
Expert:  Tony Tax replied 10 months ago.
Hi.

If you retain a financial interest in a property which you never live in then your share of any gain will be subject to Capital Gains Tax with the first £10,900 being tax free,

Expenditure on the repair of normal wear and tear damage is not treated as capital expenditure that you can add to the cost of the property for Capital Gains Tax purposes you can with improvement expenditure. If you had to undertake a complete refurbishment, then you may be able to claim some or all of the expenditure on that. If I were you, I'd make a list of the expenditure and show it to the adviser you mentioned t see if any could be claimed.

I hope this helps but let me know if you have any further questions.
Expert:  Tony Tax replied 10 months ago.
Take a look here for some information on Capital Gains Tax and record keeping and here for some information on improvement costs.
Customer: replied 10 months ago.

Did you get my supplementary questions?

Expert:  Tony Tax replied 10 months ago.
I can only see your original question and my responses?
Customer: replied 10 months ago.

Supplementary questions:


1) Do my daughter and I each get £10,900 CGT allowance?.


If so, that would solve the issue as the gain is only £21,000.


Assume the allowance only works in the year of sale i.e. cannot work for each of the 10 years we have owned.


2) Two types of expenditure, both well beyond 'normal wear and tear' which might be allowed against CGT?


a) Restoration from major damage caused by tenant's cannabis 'factory' in the house.


b) Essential replacement windows - wooden ones has disintegrated.


The 'adviser' was only a telephone helpline so no longer in contact.


Thanks again.

Expert:  Tony Tax replied 10 months ago.
I have your supplementary questions now. Let me take a look and I'll get back to you shortly.
Expert:  Tony Tax replied 10 months ago.
1 Each part-owner of the property will be entitled to a £10,900 exemption. Two exemptions would cover a £21,000 gain. You only get one CGT exemption each no matter how many tax years you own an asset.

2 a Strictly, the works would be repairs and not improvements so the expenditure would be disallowed unless such expenditure improved on what was in place when you bought the property.

2 b If you have replaced wooden frames with UPVC double glazing you will probably be able to claim the cost as an improvement.
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14013
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
Tony Tax and other UK Tax Specialists are ready to help you
Customer: replied 10 months ago.

Thanks very much - that answers my questions. Just have to hope the agreed sale goes through now!


Excellent service !

Expert:  Tony Tax replied 10 months ago.
Thanks for accepting my answers. Good luck with the sale.

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