Will gave option to purchase at discount. CGT cost?
The former landlord of our client provided in her Will for him to have the option to purchase a property (then occupied by our client for business purposes on an informal basis) from her Estate at market value less 25%. It also provided for him to be allowed to pay for the property over a fifteen year period without interest.
Our client took up the option in April 1999 at a price of £75,000 (£100,000 less 25%). The property is now to be sold for £275,000.
Is the base cost for CGT purposes £75,000 or can we also claim that the £25,000 discount is an additional allowable cost (possibly this is the probate value of the option that merged with the actual purchase price on acquisition?). The option was not assignable.
Raj
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