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Capital Gains Tax Relief on Stamp Duty

If 3% surcharge paid on a 2nd property & 1st property is rented can you claim CGT relief

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Client buys property 1 (no stamp duty) lives in it then buys property 2 (stamp duty includes 3% surcharge) to live in and rents property 1 out.

A few years later client  sells property 1.   Can any tax relief be given against the capital gain - no stamp duty paid directly on that property but the 3% would not have been paid on property 2 had she not owned property 1.

 

 

Replies (11)

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Psycho
By Wilson Philips
16th Jun 2021 17:12

Seriously?

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Replying to Wilson Philips:
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By Tax Dragon
16th Jun 2021 17:28

I had to bite my lip (well, sit on my hands and count to 30) to avoid a version of that reply that would doubtless have gotten me reported.

OP, CGT doesn't work like business tax. The question is pretty much: is it a cost of acquiring, enhancing, defending the title to or disposing of property 1?

Look at government helpsheets, look at CG Manual, look at s38 itself, look at something if you're doing CGT without basic knowledge of CGT. And with more issues (eg Ss222 and 223) here than just calculating the gain, maybe farm it out. I've seen experienced accountants get the computation you are about to do wrong - and you are at risk of doing likewise.

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Replying to Wilson Philips:
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By Hugo Fair
17th Jun 2021 11:04

Much pithier than me (and I don't have a lisp) ... I was going to post "John McEnroe lives" before I saw you'd beaten me to it.

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RLI
By lionofludesch
16th Jun 2021 19:07

I vote no.

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By The Dullard
16th Jun 2021 21:13

Sounds reasonable. You will obviously have to amend if she sells property 2.

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By Duggimon
17th Jun 2021 09:02

I'm a bit lost, are you asking if you can deduct the excess SDLT paid on property 2 from the capital gain made on property 1?

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Replying to Duggimon:
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By barberbuzz
17th Jun 2021 12:48

Yes. Although it was paid on the non rental property, taxpayer believes the extra 3% surcharge should be allowed for CGT relief as would not have been due if she hadn't got the rental property.
I have told her that only stamp duty relating to the same property would be allowed.
I just wanted to check I wasn't missing something. Sorry if it was a stupid question.

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Replying to barberbuzz:
By SteveHa
17th Jun 2021 13:08

I can understand your client casting doubts that you then need to verify, but by and large, CGT is one of the simpler taxes to grasp. Costs follow assets. It's only when you get into reliefs that there may be other considerations, but in computing the gain itself there should never be ambiguity.

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Replying to barberbuzz:
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By Hugo Fair
17th Jun 2021 13:12

My incredulity at the question (I can't speak for others) wasn't even with the central mix-up of taxes & properties ... it was your concluding part of the question:
"the 3% would not have been paid on property 2 had she not owned property 1" ... but she DID own it at the relevant time, so you might as well say it wouldn't have been paid if Martians had landed and changed our tax laws retrospectively.

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Replying to Hugo Fair:
Maytuna
By DJKL
17th Jun 2021 13:21

The Martians will be scrapping CGT and bringing in a water tax.

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Replying to DJKL:
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By barberbuzz
17th Jun 2021 14:53

Haha. At least I don't think I am at risk of alien abduction. My brains not a good enough specimen.
At least my daft question gave you some entertainment

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