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Where Taxpayers and Advisers Meet

Property cost basis approach from HMRC?

BarbaraLondon
Posts:2
Joined:Mon Jun 19, 2017 9:16 pm
Property cost basis approach from HMRC?

Postby BarbaraLondon » Mon Jun 19, 2017 9:23 pm

Hello there

What is the cost basis calculation (for CGT purpose) of a property that was transferred from one spouse to the other under a divorce settlement, before being sold 5 years later?

I know that at the point of transfer there was no Capital Gain Tax to be paid, as it was the only and main residence of both spouses.

However, the property was sold 5 years later, thus there could be a CGT to be paid and I need to find out what is the HMRC approach to calculating the cost basis of the property at the time of the transfer?

Does anybody know the answer to what HMRC says? Is it market value at the time of the transfer? Or...?

Thank you very much.

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Property cost basis approach from HMRC?

Postby pawncob » Tue Jun 20, 2017 11:15 am

If it was the PPR of both spouses, then it must have been before the divorce settlement, in which case the owner inherits the spouses capital history.
If it was really part of the divorce settlement then a value would have been attributed at that time, and that's the base cost for that half.
With a pinch of salt take what I say, but don't exceed your RDA

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Property cost basis approach from HMRC?

Postby maths » Tue Jun 20, 2017 4:14 pm

The base cost depends upon a number of factors.

If the transfer was made in the tax year of separation (or an earlier tax year) the base cost for the transferee is the original cost to the transferor.

It the transfer is made after the tax year of separation the base cost is market value.

The date of the disposal may be the date of the agreement to transfer; or the date of the court order; or the date of the decree absolute.

BarbaraLondon
Posts:2
Joined:Mon Jun 19, 2017 9:16 pm

Re: Property cost basis approach from HMRC?

Postby BarbaraLondon » Fri Jun 23, 2017 6:15 pm

Thank you so much Maths.


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