Fontes

We have lived for just over 25 years in a once derelict farmhouse, outbuildings and grounds (footprint 5 acres). We wish to sell and downsize and are worried about liability for CGT. The property consists of the farmouse - our principal residence over those years - an attached cottage converted from a former hayloft and a separate detached cottage which was once a cowshed. We incurred the purchase price and then the subsequent renovation costs to make the buildings habitable. On completion of the renovation, we eventually allowed the attached and detached annexes to be used for holiday letting and they are still so used. To bring them from dereliction to their present high standard obviously cost tens of thousands of pounds. Will we be allowed to offset these substantial renovation costs against any liability for the cottages? The farmhouse is our principal (and only) private residence. The two holiday cottages - and the associated business - are now owned and run by our daughter who does not live on site. Part of the cost of renovation and improvement was for our daughter to create a separate garden area for each cottage, all within the overall site. We would much appreciate HMRC and fellow forum-users' advice as conscientious tax-payers and yet wishing to take advantage of any legitimate mitigation.