I have a client who bought a property, renovated and now is planning to sell. The whole project took a few months. I already established that it would be treated as trading rather than investment. When selling the property can we deduct the full costs of renovation? No extension to the house was built, just renovation plus new a bathroom was created.
Arthur Weller replies:
You are correct that it would be treated as trading rather than investment. You can deduct the full costs of renovation. It meets the requirement of 'wholly and exclusively'. Furthermore if this person had to borrow money for this project, and paid interest to a lender, the interest is also an allowable expense.