My client bought a large property in 1985 to live in; she had no other properties. It was run down and she spent a significant amount bringing it up to a high standard.
About ten years ago she downsized into a smaller property (where she still lives) but she retained the original property which she rented out. Rental income was fully disclosed on her tax return (no capital improvements were made while it was rented). The expenses for normal maintenance and decoration were deducted from the rental income.
She has decided that it is time to sell the original property. Clearly a significant part of the gain will be covered by principal private residence relief (PPR) but part of it will be taxable. As I understand I have to calculate the gain first and then apportion in the usual way. So the capital expenditure incurred while she lived...
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