Allowable expenses against rental property income and capital gains

I jointly own a property in the UK, which was previously let to commercial tenants. The tenants went insolvent in January: the property has subsequently remained empty, and we haven't used it in any way. In February, we decided to sell the property: we've now exchanged contracts, but haven't yet completed. We received income from the property during FY 2022-23, but haven't received any income during FY 2023-24. We've incurred various expenses. I'd like to establish which of these can be offset for tax purposes, and if so, how. I've reviewed a number of HMRC web pages and forum posts, and my best guess is as follows: (a) Expenses that can be offset against capital gains: - Property agent's and solicitor's sale fees - Energy performance certificate (b) Expenses that can be offset against income during FY 2022-23: - Insurance during FY 2022-23 - Costs of re-entering the property and clearing the previous tenants' remaining items (c) Expenses that we don't seem able to offset: - Insurance during FY 2023-24, due to the lack of rental income - Business rates, council tax and utilities during FY 2023-24, as above (no such expenses during FY 2022-23) However, I expect that I've made some mistakes in the above. Can you confirm the things I've got right, and correct the things that I haven't? (The property is jointly owned with other family members as tenants-in-common, so we'll apportion the expenses amongst us. The usage is a mix of commercial and residential, so we'll apportion the capital gain between the two in due course. We don't let out any other properties.

Hi,

You can claim the expenses outlined in point (a) of your question against the capital gain on the disposal of the property. You can also claim the cost of the solicitor’s fees when you acquired the property.

If you intend to let the property after the tenants had left then you can claim the expense of clearing the property against the rental income. If, however, at that time you intended to sell the property then the expense of clearing the property would not be deductible.

To qualify for post cessation expenses, the expenses have to meet the criteria set out in the following guidance:

BIM90115 - Post-cessation receipts and expenses: post-cessation trade relief: meaning of qualifying event

It appears the post cessation expenses will not be allowable.

Thank you.

Hi. I am selling a property that was purchased as a buy to let. 1. I believe I can offset the solicitors costs incurred when buying and selling the house against my capital gains bill. Does the same apply to solicitors fees for the two re-mortgages we had on the property during the 8 years we owned it? 2. We had the initial mortgage and two remortgages, each time incurring mortgage broker fees and a 'product fee' that was added to the mortgage. Is any of this deductible against capital gains, or should I have been deducting it against income tax in the years it occurred? Thanks

Hi Thank you for your question. Unfortunately I am unable to give you any Capital Gains guidance within this general Income from Property forum. However I can confirm that you would be able to claim any solicitors costs incurred when selling the property against any possible Capital Gains liability. Any fees incurred in respect of the re-mortgage of the rental property whilst it is being rented should be claimed as a business expense against the actual income from the rental property. Thank you