Capital Gains Tax

Irishder

Hi,
I am thinking of buying a house in need of restoration. Spending money to renovate etc. Are you allowed to offset the expense of renovation against CGT due?:

Example below

Buying price: 70000
Expenses: 15000

Total spent: 85000

Selling price: 100000

is the CGT based on 70K or 85K?

Thanks

Lockedout2

If you buy something with the intention of selling it then it may be income tax, you may need to consider VAT and RCT.

Seek professional advice.

In either case costs will be allowable as a deduction.

scheister

Irishder wrote: »

Hi,
I am thinking of buying a house in need of restoration. Spending money to renovate etc. Are you allowed to offset the expense of renovation against CGT due?:

Example below

Buying price: 70000
Expenses: 15000

Total spent: 85000

Selling price: 100000

is the CGT based on 70K or 85K?

Thanks

need to look at badges of trade (google here can be your friend)
its look at things like number of transactions, frequency of transactions, was profit a motive, was their any extra work done, reason for sale.

if you do it as a once off you can claim its not a trade so CGT arises. If you are flipping a house every 6 months and have same people working as staff each time that's a different story. Talking to a tax adviser here is best bet as he will look at whole picture for you

barneystinson

scheister wrote: »

need to look at badges of trade (google here can be your friend)
its look at things like number of transactions, frequency of transactions, was profit a motive, was their any extra work done, reason for sale.

if you do it as a once off you can claim its not a trade so CGT arises. If you are flipping a house every 6 months and have same people working as staff each time that's a different story. Talking to a tax adviser here is best bet as he will look at whole picture for you

I wouldn't think it's as straightforward as saying just because it's a once off it will be accepted as a capital gains tax transaction. For example, the type and duration of financing might argue otherwise - if the transaction is financed by short-term finance then it would be difficult to argue that it wasn't but with the intention of an onward sale for profit.

scheister

barneystinson wrote: »

I wouldn't think it's as straightforward as saying just because it's a once off it will be accepted as a capital gains tax transaction. For example, the type and duration of financing might argue otherwise - if the transaction is financed by short-term finance then it would be difficult to argue that it wasn't but with the intention of an onward sale for profit.

im not saying as a once off its a CGT transaction im saying as a once off its more likely but depends on the answers to the other badges of trade

ThumbTaxed

Can you have vat and rct applying but cgt applying or will it be rct, vat and it or just cgt?