Baseline CGT value

[Chris J]

If I leave my PPR, c/w mortgage, to my Grandchildren (minors, so in trust), and ensure they have sufficient funds, also in trust,to pay off the Mortgage, then the house will be owned by them outright.
Is their baseline "aquired" cost for future CGT calc. the Probate value of the property, or that less the outstanding Mortgage?

[hashman]

Generally speaking value for future CGT purposes is the value at date of death ignoring the mortgage ie. probate value.

[Lambs]

C,

The charge on your PPR is relevant to the calculation of IHT on your estate.

Generally speaking, there is no CGT on death: if you intend to pass the property on by some means to your children at that time, then the fact that it's your PPR is irrelevant. PPR is, in effect, a 'lifetime' capital gains relief.

If there is such a thing.

H has of course answered your question: I am just pointing out that the PPR issue is something of a red herring.

Regards,

Lambs

[Chris J]

Thank you both for your replies.
I had realised that the fact that the property I was aiming to leave to my Grandchildren was my PPR was not relevant as such to my query.
My idea is to have a Mortgage in place on my passing; this will reduce my Estate for IHT.
My G/children inherit the property c/w Mortgage, but have sufficient funds to pay it off.
However, my worry was that if my G/childrens "aquired" value was Property value less Mortgage,rather than just full Probate value of the property, then this would increase their CGT when they later sell. This would cancel out the IHT saving.
As you have confirmed that full P. value is used without M. reduction, then I am a happy bunny, as my plan is sound. Thanks again.

[hashman]

Yeh - but what about the cash from the mortgage - that has to be brought into the equation - unless you give this away 7 years before your death.

[hashman]

Or maybe you are thinking of investing in in AIM companies - which after 2 years will qualify for 100% business property relief? That's quicker than waiting 7 years!

[Chris J]

Thanks Hashman, was aiming to use the 7 year route, possibly with insurance, as I am not over confident of the reliability of AIM arrangements.

[hashman]

Without wishing to give financial advice (which I am not qualified to do) I have read that there are some very good companies listed on the AIM - strong financially and paying dividends. There are firms who put together portfolios made up of 10 or 12 of the best of these for people wishing to take this route.

There is speculation that the Government may limit the availability of the advantages of AIM companies by restricting it by size, so only smaller companies would qualify in the future. So definitely worth a look now in my opinion.