I've been trying to get some tax advice on some possible CGT tax that my parents maybe liable too, I've phoned and paid for accountants but they've all given generic advice, which is quite frustrating.
My brother, parents and I purchased a property that we all residing in, we all owned a equal share of the property.
on 01/10/16 we had the land split and the following year we built a new house on the new piece of land
Now my parents want to remove themselves from the title deeds of the new property, essentially they will gift their share for free which would result in a CGT liability.
The question I have is how do you determine the CGT liability as the new land wasn't purchased so how do you value the land at the point of the land being split.
I have measured the land and come up with the following suggestion, is this a credible approach to take when estimating the base cost of the land
Land A 172 Sqm
Land B 191 Sqm
Total area of initial land 363 Sqm
Property value at date of land split £500,000 (this is a reasonable valuation of the property value on the date)
estimated cost of value of building £200,000 (this is the cost if you where to build a property from scratch)
Land cost £300,000 (assume the remainer would be the value of the land)
land cost per area of land A £142,000
land cost per area of land B £158,000
Capital Gains Tax Calculation
Current Market Value of Second property £450,000
Less Cost of land: £158,000
Less Capital improvements: £180,000 (amount paid to build new house)
Capital gain £112,000
per person £28,000