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Where Taxpayers and Advisers Meet

CGT on a multiple ownership property

hpr23
Posts: 10
Joined: Sun Sep 06, 2015 11:16 pm

CGT on a multiple ownership property

Postby hpr23 » Sat Aug 10, 2019 11:30 am

My Mother recently sold a property along with 2 others and I was wondering what her CGT liability may be. Originally my Father's Ltd company bought a building plot and started to build a new house. Half way through the build the property was sold to my mother and father and my father's business partner and wife, therefore 4 owners with 25% ownership each. The property was completed with my Father standing most of the development costs. This was then rented out. My father died in 2010, my mother acquiring his quarter share with the rental continuing until the end of 2017. The property was sold in 2018 and now the CGT needs to be calculated for her 2018/9 tax return.
Can the costs of construction mostly paid for by my Father be offset against the sale of the house and would this be divided equally between the 3 surviving owners or just applicable to my mother's share? The costs are quite substantial relative to the sale price as the part built house required a lot of work and materials after the transfer/sale from the Ltd company. I do have all receipts and invoices as proof of this.

pawncob
Posts: 4389
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: CGT on a multiple ownership property

Postby pawncob » Sun Aug 11, 2019 5:14 pm

Probate valuation?
Transfer cost from LTD?
Agreement between owners apportioning costs?
Much more info required.
With a pinch of salt take what I say, but don't exceed your RDA

hpr23
Posts: 10
Joined: Sun Sep 06, 2015 11:16 pm

Re: CGT on a multiple ownership property

Postby hpr23 » Tue Aug 13, 2019 9:12 pm

Thanks for the reply.
Probate valuation was £360k, the sale price 8 years later was £365k, the transfer from the ltd company was at a value of £190k. The costs were apportioned so that my father funded half and his business partner funded half. Both spouses although owning a quarter each did not contribute directly to the costs.

pawncob
Posts: 4389
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: CGT on a multiple ownership property

Postby pawncob » Wed Aug 14, 2019 12:23 pm

Assuming the LTD dealt with the CT on any gain, the cost would seem to be:
Ma owns £47,500 and inherits one quarter from Pa at a value of £90,000.
Bp and Bpw each have a value of £47,500.
In the absence of any agreement that building costs would be shared, I think you could claim that Pa's cost are wholly deductible (but this increase is included in the Probate valuation, so no further claim can be made in respect of Pa's share). The rest of the build costs could be attributed to Ma, or could be apportioned between all owners. A case could be made to support either treatment, but I'd choose the one that's most beneficial. ;)
With a pinch of salt take what I say, but don't exceed your RDA


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