Adverse Possession - Capital Gains Tax Query

[Ralphie12]

Hello

I would be grateful for any guidance/advice on the following. My sister is struggling to understand for an adverse possessed house that will be liable for capital gains tax, how would this be calculated? My understanding is the calculation for Capital Gains Tax is (Total time it was your home plus the last 9 months of ownership) /Total length of ownership in months = fraction. Apply this fraction to the gain (Selling price minus buying price, less costs of buying and selling and any cost of house improvements).

The part which I am trying to help her with in figuring out is what would be the buying price be in the formula?

So far i have found the below and I am making a guess that it is the market value of the house at the year it was acquired that should be used as the buying price:

https://www.legislation.gov.uk/ukpga/1992/12/section/38/enacted

Thanks

[pawncob]

If it's adverse possession, presumably you have no base cost (other than associated legal fees). If so, the whole of the gain is chargeable, subject to PPR relief (which is time apportioned and isn't affected by the base cost).

[bd6759]

S38 tells you that the allowable cost includes the amount of consideration given by you for acquiring of the asset. That would be zero.

You cannot substitute market value.