Tax allowable on purchase of Freehold ?

[Jacob Oliver]

Does anyone know please is the cost of purcahsing a freehold (including solicitor costs) tax allowable?

Jacob Oliver

[Jacob Oliver]

Sadly as yet no response to my question.
Does anyone know if the cost of purchasing a Freehold is Tax Allowable?

thanks
Jacob OLiver :p

[dazalock]

If you were to buy a freehold house and then sell it some years later, you would count the orginal cost of the freehold house against CGT when you come to sell, that is provided this is a investment property and not residential, as there would be no CGT to pay if you have lived in the property during the entire ownership. You need to provide more details really.

[Jacob Oliver]

Dazalock thank you

This ia a block of four leasehold flats owned in total by 2 persons. All four are rented (AST) so I suppose what you are saying is that the purchase costs of the Freehold in not taxable when pruchasing the Freehold but you can set these costs against any CGT when you come to sell the properties (s)

Jacob Oliver :)

[dazalock]

That would be my take on it, along with the cost of solicitors and the like, all counted against CGT at the time of sell. If you hink about it there is a division between the investment of money in a property and the costs associated with the running of a investment property. Any costs associated with the latter would be calculated against any income made in the same period.

Mr Yardley sometimes comments here, he could clarify.

[Yardleystar]

As pointed out, your investment costs are treated as the capital side of the purchase and your running costs and rent as revenue costs.

Revenue costs are dealt with on an annual basis via tax returns

Capital costs are dealt with when a disposal or part disposal of an asset triggers capital gains tax.

Capital costs include the costs of your investment ie solicitors costs etc

[Tax Accountant]

You have investment properties and you have incurred one off costs in buying the property, valuation fees, solicitors fees, extensions etc. When you sell the property, anything received over and above these costs will be considered your chargeable gains. After deducting various reliefs and allowances, you will be charged to Capital Gains Tax on the remainder at 10%, 20%, 40%, or a combination of these depending on your other taxable income and gains in the tax year in which the disposal has taken place.

In the meantime, you receive rental income. After deducting repairs, maintenance, loan interest and various other running expenses, the balance will be charged each year to Income Tax.

Any expenses already deducted from rental income cannot be deducted again when calculating your capital gains tax upon sale.