My mum is selling the flat I live in. It was my father’s, who passed away in 2013. We know she has to pay capital gains tax but are unsure what can be deducted. For example, she has just had a bill for £17,000 in major works to the property (it is a leasehold flat). Can she deduct this from the gain?
Arthur Weller replies:
I presume your mother inherited the flat from your father when he died. If so, the probate value is the base cost and can be deducted from the sale proceeds. Put simply, any improvement expenditure can be deducted from the gain. So, any part of the £17,000 that was not repairs, but was to add something to the flat that was not previously there, can be deducted. Additionally, incidental costs on acquisition and sale can be deducted (e.g. solicitor, advertising, and estate agent’s fees).
This question was first printed in Tax Insider in August 2018.