Deed Nullity and incidental costs

Good afternoon, in 2017 I purchased a property in Italy. I used it as an Airbnb for 5 years and cashed in the rent. I also did some internal renovations. The income had been regularly declared both in Italy and in the UK and taxes had been paid in both countries according to local law. in 2022 I attempted to sell the property. Right before the exchange of contract the solicitor and the notary found an old survey on the property that deemed it unsellable and inhabitable. The fault falls on the solicitor in 2017 who never should have transferred the deed to me. As I was unable to proceed with the sale, I found myself liable to damages according to the Italian law for 38K which I paid and a settlement agreement was signed with the (now ex) buyer's solicitor in early 2023. I then sued the previous owner of the property who took responsibility for the error and offered to take back the property and give me the money I paid in 2017 The only way to proceed was to transfer the property through a judge who ruled a "deed nullity" in February 2024. The money was transferred to me shortly after and the deed signed in 2017 was deemed void. Now the questions are: - Can the 38K settlement agreement for damages happened in 2022/2023 be an allowable expense for CGT purposes? - Can all the solicitor fees I incurred for the deed nullity ruling be as allowable? - The disposal was infact a deed nullity, not a transfer or a sale, destruction or a gift. Does this change anything for CGT purposes? - As I was renting the property, using the property as a business, cashing in the rental agreement and paying taxes as every owner would do, can this be classified as beneficial ownership for CGT? In short, I incurred in a loss, but what can I really claim as allowable expenses? Thank you in advance for your kind reply.

Good afternoon, does anybody have an opinion on the above queries?

Hi,
We have not got all the relevant facts, and it is for you to self assess correctly. What we can say is that how this is treated will depend on whether you actually had beneficial ownership of the property and was ordered by the court to hand it back or if in fact you never had beneficial ownership at all and the contract was simply voided.
If you did not ever have beneficial ownership of the asset, which may be the case here, then any incidental costs of acquisition incurred would not be allowable. The guidance below states 'The expenditure must have been incurred wholly and exclusively for the purposes of acquisition or disposal of the asset'.
And if there was not any asset actually acquired then it would in effect be abortive expenditure that is not allowable expenditure for capital gains purposes.
CG15260 - Incidental costs of acquisition and disposal: specific examples
If on the other hand you did have beneficial  ownership and so it was classed as an acquisition and then a disposal, for the same amount, then any incidental costs of acquisition or disposal, as per the details above and below may be allowable:
CG15250 - Expenditure: incidental costs of acquisition and disposal
However these allowable costs would not include any costs incurred to preserve or defend title to the asset, where that case was lost.
It will be for you to determine, based on the facts of the case, if you actually had beneficial ownership or not. The guidance below has some information on this but you may wish to seek professional help if you need further help with this.
CG70230 - Land: legal and beneficial interests in land  
Thank you.