Allocation of sales costs in a cgt comp

how to split

Didn't find your answer?

My client has sold a house with some land (not garden and the house was never his home, so all liable to cgt, but obviously at different rates). 

I have a split of the sales proceeds and purchase price between the two elements.  But how would you split the associated legal and estate agent costs?  I would split them pro rata according to the % of the total, against the house and the land (and have another comp for comparisson from another accountant that did a similar calculation for a different client some way back that did exactly this).  I am sure "just and reasonable basis" principles should apply here.

The  client is adamant that he read somewhere we can take it all against the house, but can't confirm where.  I can't find anything to confirm this (or indeed, my own solution...).

Can anyone confirm who is correct?

Thanks

Replies (5)

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By AndyC555
20th Feb 2024 12:11

"The client is adamant that he read somewhere we can take it all against the house, but can't confirm where."

Tell your client that you are adamant that you read somewhere that he is wrong but you can't confirm where.

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By Ruddles
20th Feb 2024 12:16

but can't confirm where

How convenient

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Replying to Ruddles:
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By snickersinatwix
20th Feb 2024 12:21

I know, I know, but I always start to doubt myself when we get into these situations. I expect his mate in the pub told him.

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By SteveHa
20th Feb 2024 12:37

You might ask him would he do the same if the sale was his own home with grounds outside of the permitted area.

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By DKB-Sheffield
20th Feb 2024 13:13

Estate agent fees are usually based on price of sale proceeds - so I'd say apportionment be value of proceeds would be entirely appropriate.

Legals... I suspect 2 titles? Can't see any lawyer not billing for each separately - even if it's all on one fee note. In fact, I'd potentially say the fee for the land sale would exceed the value (pro-rata) of a 'bog standard' housr conveyance fee. With your proposed computation, I suspect client is 'in the money'.

Searches, Land Reg fees etc... will all be title-specific.

Of course, it may not be a simple as all of that! There may well be combined title costs etc. and the sale may be structured in such a way that my assumptions may prove to be entirely incorrect!

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