CGT on gifted property

[Tony_T]

Hi, I am new to the forum I need some help as I am trying to correct a capital gains return made by my father-in-law, he gifted a property in October 2014 to my wife and her 2 sisters, The property was valued at £600,000 with a sitting tenant - it is a large property, but has the problem of a sitting tenant in one part of the house, it is a regulated tenancy and the tenant refuses to vacate the property as is his right. With vacant possession the value would be nearer £825,000, it also requires complete modernisation. I have just discovered that he has filed a return showing the transfer value as £600,000 minus 31/3/82 value £38,000 minus allowance £11,000, leaving a gain of some £550,000. This I believe is wrong for the following reasons, the property was puchased with his wife in 1959 as joint tenants, and used as the family home until 1966, at which point they moved out and it was let as bedisit accommodation to present day, his wife died in 2007 but no value was obtained for probate. The property was gifted with the sitting tenant in 10/14. Upon checking all the available information I think it should have be declared as below, since the property was once the principle residence and also jointly owned

Disposal value in Oct 14 £600,000 minus

base cost (50% 1982 value + 50% 2007 probate value)
PPR last 18 months 18/390
Letting relief = to PPR (as less than £40,000 or gain)
Allowance £11,000
Any allowable costs (valuers costs ??)


I am hoping to get him to a Tax advisor to look at this, but he is quite elderly, and I wanted to check my assumptions beforehand as he is worrying about a large tax bill.

Any help is appreciated, many thanks

[Tony_T]

Hi, I am new to the forum I need some help as I am trying to correct a capital gains return made by my father-in-law, he gifted a property in October 2014 to my wife and her 2 sisters, The property was valued at £600,000 with a sitting tenant - it is a large property, but has the problem of a sitting tenant in one part of the house, it is a regulated tenancy and the tenant refuses to vacate the property as is his right. With vacant possession the value would be nearer £825,000, it also requires complete modernisation. I have just discovered that he has filed a return showing the transfer value as £600,000 minus 31/3/82 value £38,000 minus allowance £11,000, leaving a gain of some £550,000. This I believe is wrong for the following reasons, the property was puchased with his wife in 1959 as joint tenants, and used as the family home until 1966, at which point they moved out and it was let as bedisit accommodation to present day, his wife died in 2007 but no value was obtained for probate. The property was gifted with the sitting tenant in 10/14. Upon checking all the available information I think it should have be declared as below, since the property was once the principle residence and also jointly owned

Disposal value in Oct 14 £600,000 minus

base cost (50% 1982 value + 50% 2007 probate value)
PPR last 18 months 18/390
Letting relief = to PPR (as less than £40,000 or gain)
Allowance £11,000
Any allowable costs (valuers costs ??)


I am hoping to get him to a Tax advisor to look at this, but he is quite elderly, and I wanted to check my assumptions beforehand as he is worrying about a large tax bill.

Any help is appreciated, many thanks

[Tony_T]

Hi, just wondering if anyone can help or confirm these figures, many thanks

[DCF]

Method looks okay. Legal fees on transfer to the children is a cost of disposal. Valuation fees should not be an allowable cost.

[Tony_T]

Thanks for checking this for me, much aporeciated

[Tony_T]

Valuation fees should not be an allowable cost.

I thought I saw them mentioned in TCGA 1992 s38, but it's a litle unclear, they shouldn't amount to great deal anyway.

[DCF]

Survey fees yes but not valuation.

[Tony_T]

Ok. Thanks again