Joint Property Valuation Discounts - IHT and CGT

[aka1978]

Any thoughts not he following would be much appreciated.
The deceased was a tenant in common with her former husband. Now that she has passed the former spouse is circling with view to make an offer on her share. Beneficiaries and PR are related to the spouse.

House was valued in entirety at date of death, with customary 15% deduction as the property is PPR of former spouse. DV have yet to confirm acceptance, but circumstances of the case hopefully may be persuasive.

The sale if it went ahead would I take it be considered a connected party sale and market value would be substituted for sale price for purposes of CGT computation. I wonder how would the joint property discount be treated in the disposal valuation exercise? Is the same principle applied by DV? Value entirely for CGT and then apply discount to half share to reflect market disadvantages of a half share. Or is it irrelevant?

The beneficiaries are planning to ask the buyer for 50% of the vacant possession dod valuation -£200K, the ascertained value which is TBC is £170k and transfer would be effected by the executor. Beneficiaries are also considered trying to secure an open market sale but may be difficult due to intransigence of the ex. The other option is for PR/beneficiaries to attempt to purchase and gain control of spouse's share with other estate funds, but there are no doubt many unforeseen implications to this!

Thank you

[AnthonyR]

If the value of the estate is below the IHT NRB, are you better off proposing the higher valuation to the DV, rather than trying to agree a discount for a half share? That way there is no CGT issues for the PRs.

Arguably if the property is sold shortly after death for £200k that's the market value, especially if there is already an agreement in place to acquire at that value?

[aka1978]

Thank you Anthony R


The estate is liable to IHT falling over NRB

The death was over a year ago. We are concerned that the 15% discount will be wiped out if there is a sale too soon.

The property is on the market now for offers over 425k, the co-owner has tentatively proposed buying out the deceased's share at £200K, although is rather flaky about making a committed offer. The probate value of the deceased share submitted by the PR, included the 15% discount. Historically the former spouse had been very difficult and it was felt this should be reflected in value of her share.