CAPITAL GAINS TAX

[Zenbal]

I would be most grateful for advice regarding the capital gains position in respect of the recent sale of a property.
The situation is that my wife and myself were left an option in the Will of my friend and neighbour to purchase a house for a price below its market value . The actual wording of the Will is “I direct my Trustees to offer my property known as (address xxxxx) aforesaid, or any other property of which I am possessed at the date of my death, to the said (xxxxx) and his wife (xxxxx) for the purchase of the same by them at a price of £150,000

The house was valued in 2011 for the purpose of probate at £365,000. We subsequently sold the property in 2012 for £400,000.

Is the starting point for CGT the £150,000 paid or the probate value of £365,000

I would be most grateful for advice on this matter

[pawncob]

Your base cost is £150,000.

[bd6759]

Your base cost is £150,000.

What makes you say that?
Normally a legatee is deemed to acquire assets at their probate value. In this case the legatee acquired an option, not the property. That option would have a value, presumably £115,000.
The acquisition of the property was a sale by the executors, therefore in normal circumstances the cash cost would be £150,000, but there is also the value of the option which brings the cost to £365,000.

Another way of looking it is that the sale was was clearly not a bargain at arms length and there is an element of intended gratuitous benefit. In those circumstances the sale is deemed to be at market value, which would be £365,000.

[King_Maker]

I assume the Probate Value (and any IHT) would have been amended downwards to reflect the actual sale price of £150,000?

If so, your base cost for CGT would seem to be £150,000.

[Zenbal]

The probate/IHT Value as agreed with the district valuer is £365,000
Thank you to every one for your input