Capital or revenue - or neither?
My client bought a 20 year old house for letting 4 years ago for £400k. He duly let it. He then put it on the market a year ago. He quickly got a buyer,and the buyer applied for a loan from one of the banks which was recently rescued by the Government. The bank's survey report said that the house had some small cracks in a few bricks, and £30k needed to be spent on rectifications. NOT subsidence, but extra beams were needed in the roof space etc. They would not lend until the work was done. The client duly got the work done, and sold for £360k. When the client bought the house a full survey was carried out, and the house got a clean bill of health. The client considered suing that surveyor, but his lawyer advised against this, saying that Banks are now being ultra-cautious where a property has small defects, and the first surveyor was not to blame. The insurance company refused to pay up, saying that the problem could not be described as subsidence or heave. Am I right in saying that there will be no tax relief for the £30k expenditure?
agreed
put it this way HMRC would otherwise almost certainly argue this is way beyond mere repair/reinstatement particularly as additonal beams were put in and hence not allowable as revenue but capital...your loss is £70k.
pembo
Capital Expenditure
I would include this as enhancement expenditure on the CGT Comp ... and increase the capital loss ... which hopefully the client can offset against future gains.