Pre Owned Assets ' do you just 'guess' the rental value ?

Pre Owned Assets ' do you just 'guess' the...

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Client - gifted property to children 5 years ago but still lives there. It is not going to be treated as GWR for IHT, so therefore, client will be liable to tax on the market value of the rental. Based upon similar houses in the area which are advertised for rent, my client guesses that the rental value will be £7,200 (£600 per month). Do I simply use this for the POA tax calculations, or should more work be done to support this value ?
David Crossley

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By User deleted
18th Sep 2006 09:21

Are you sure it's now a GWR?
Hi David,

My first thought is that actually the gift with reservation provisions are quite difficult to get out of and given the the scenario you outline seems fairly straightforward (perhaps only for the purposes of articulating it simply) are you absolutely certain that the POA provisions are triggered?

Kind regards

Edward

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By User deleted
17th Sep 2006 14:05

BUT WHERE DO YOU PUT THE RESULT ON THE SA 100??
The Revenue say as to the the quantum http://www.hmrc.gov.uk/poa/poa_guidance2.htm#21on :_
The 'rental value’ of the land for the taxable period is the rent which would have been payable for the period if the property had been let to the chargeable person at an annual rent equal to the annual value. The annual value is the rent that might reasonably be expected to be obtained on a letting from year to year if

The tenant undertook to pay all taxes, rates and charges usually paid by a tenant, and
The landlord undertook to bear the costs of the repairs and insurance and the other expenses, if any, necessary for maintaining the property in a state to command that rent.
The rent is calculated on the basis that the only amounts that may be deducted in respect of the services provided by the landlord are amounts in respect of the cost to the landlord of providing any relevant services. Relevant service means a service other than the repair, insurance or maintenance of the premises. In other words, if the landlord provides other relevant services, for example the maintenance of the common parts in a block of flats, that are reflected in the rent then the cost of providing those services may be deducted from the rent.

The regulations do not specify the sources from which the required valuations should be obtained. However we would expect the chargeable person to take all reasonable steps to ascertain the valuations, as they would do if, for example, they were looking to let a property on the open market.


A deafening silence , however , as to where a POA charge is to be shown on the SA Return.

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