Capital Gains - Mortgage interest as expense?

C

cool_cat

Registered User
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Hi there,

I am filing a CGT payslip for a sale of agricultural land. Does anybody know if I can add my mortgage interest costs to the acquisition expenses and therefore reduce my chargeable gain by that amount? It would seem logical to me as I wouldn't like to pay tax on something I had to pay to acquire the land...but I may be wrong...

Thanks!
 
No. unfortunately mortgage interest is not allowable in a cgt computation as an expense - only expenses such as legal costs of acquisition and disposal and auctioneers fees etc
 
Did you get professional advice on the transaction? If it falls within the definition of residential development land it may be taxed differently and you might get relief on interest paid. Talk to an accountant or tax advisor to determine this before you file your return.
 
ubiquitous said:
Did you get professional advice on the transaction? If it falls within the definition of residential development land it may be taxed differently and you might get relief on interest paid. Talk to an accountant or tax advisor to determine this before you file your return.
Click to expand...

I have contacted revenue and they have informed me that mortgage/loan interest is in fact allowable as a cost of acquisition against Capital Gains - I am talking about Agricultural Land so no interest relief applicable.

I am going to put it through unless I can come up with a written rule that says mortgage/loan interest costs are NOT allowable against capital gains...

Thanks for your help!
 
cool_cat said:
I have contacted revenue and they have informed me that mortgage/loan interest is in fact allowable as a cost of acquisition against Capital Gains
Click to expand...

This is clearly incorrect and you may well end up in trouble with Revenue if you depend on this "advice"
 
If the Revenue told you this, then the rules have changed but I have never seen any amendments to leglisation. But if they said this and you are willing to take their word for this I would strongly recommend getting this in writing from them.

The following are section relating to interest against CGT. These are exact wording as I have copied and pasted.

Interest
s552
Interest paid by an individual or any non-corporate body is not allowable as a deduction for CGT purposes. There are no exceptions to this rule.

s553
Generally, for CGT purposes, interest, even if charged to capital, is not allowed as a deduction in calculating chargeable gains. The only exception is made in the case of a company. In relation to a company there is an exception so that interest is deductible if:
the company incurs expenditure on the construction of any :
building,
structure
or works
that expenditure was allowable as a deduction in computing a gain arising on the disposal of the asset,
that expenditure was defrayed out of borrowed money, and
the company charged to capital all or any part of the interest on that borrowed money referable to a period or part of a period ending on or before the disposal.
The amount of the capitalised interest is deductible in such circumstances.
 
Well that solves it.

Thanks for that information - I will not be including the interest costs in my CGT calculations...

Cheers
 
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