Property expense - legal fees

Property expense - legal fees

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Client has several properties that he rents out. He incured legal fees in trying to purchase a further property to rent out.

The purchase fell through. Presumably there is no relief for the legal fees incurred on the abortive purchase? There is no asset for CGT relief and the expense is not a revenue expense.

Am I right?

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By Steve Kesby
30th Sep 2014 12:58

Not sure...

... if THIS helps?

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Replying to lionofludesch:
Red Leader
By Red Leader
30th Sep 2014 13:26

decision

Steve Kesby wrote:

... if THIS helps?

...They seem to me to be an ordinary incidence of having a property business. Costs only become capital expenditure once a decision has been made to purchase a particular property. Then if the deal doesn't go through it would be non-allowable as abortive capital expenditure.

Up to the point a decision is made to purchase a particular property, they seem to me to be revenue expenses of pertaining to the general management of the investments of a property business and so deductible from the profits of the property business. There's no single property by single property approach any more.

That helped until I started to think "when is the decision made to purchase the property?" !

As my scenario is one of legal fees being incurred, realistically a decision must have been made to purchase otherwise the client wouldn't have instructed a conveyancer. So Steve, am I right in thinking that your conclusion would be "non-allowable as abortive capital expenditure"?

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By King_Maker
30th Sep 2014 14:15

My opinion is not allowable - but possibly allowable via an Investment Company.

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