How we handled a Highgate property disposal for £420,000 CGT saving
Client X is a long-time Highgate resident who inherited a buy-to-let house on Hornsey Lane from a parent in 2009, and recently decided to sell it for £1.4 million. The acquisition base cost was the 2009 probate value of £680,000. Her previous accountant had simply quoted gain = £720,000 and calculated CGT at 24% on the lot, less the annual exempt amount.
We reviewed the file carefully and identified three significant adjustments. First, there were £78,000 of qualifying enhancement costs (a major loft conversion in 2013 and a kitchen extension in 2018) that had been treated as repairs in the rental accounts but were actually capital improvements that should add to the base cost. Second, Client X had lived in the property herself for 14 months between 2014 and 2015 between tenancies, qualifying for proportional Principal Private Residence relief on that period. Third, certain disposal costs (legal fees, estate agent commission, EPC) had been omitted.