CGT on Inherited Land

CGT on Inherited Land

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My wife and her two brothers were left psome land by their Father 24 years ago (They paid Inheritance Tax on the estate left to them if that makes a difference). It was put on a 25 lease to a local company a year before he died, on which they erected a telecoms transmitter for local taxes and minicabs. The company ceased to use the transmitter some ten years ago and took down the transmitter, since which the land has been left to become over grown.

As the company wanted funds to release the lease (even though they were not using the land) my wife and her brothers decided to wait till the end of the term. The lease is ending early next year at which time they will sell the land to a developer or consider developing it themselves.

My question is what is the capital gains tax situation (or indeed any other tax) and is there any way to mitigate any liability.
Anon

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By User deleted
27th Nov 2007 10:19

It's using, not banking, indexation
Disdaining the use of a pocket calculator , I make it that the acqusition date was in 1983, so , if indexation allowance can be brought into the CGT comp on sale, we are looking at the deemed cost (agreed Probate Value ) being doubled.
This, coupled with 40 % taper relief , would lead to a material reduction of the (assumed) taxable gain if unconditional contracts were exchanged pre- 6/4/08. Anon does not give the posited marginal tax rates of the co-owners so there is no way one can categorically state that waiting until 2008/09 for the 18% CGT rate will save money even with the loss of indexation and taper-- or vice versa. It's number-crunching time and if it is ascertained that a 2007/08 sale would be much more beneficial and there is a real worry of finding the right purchaser between lease termination and next 5 April, consider possibilty of paying lessee a sweetener to tear up the lease (the amount paid would be claimable in the eventual comp) or selling to a trust in favour of the co-owners. Hopefully, the trustees could sell and release the funds before
tax pay date of 31/1/09.

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