Please coud I have some help with a problem a client has thrown in? I can't get my head around it.
The client is daughter 2 but the problem I have is getting my head around are the transactions before daughter 2 became involved.
Father gifted his home (only residence) to daughter 1 and moved out to rented accomodation in 2009. Daughter 1 and husband lived in a jointly owned smaller property that they bought for £70k in 1998 (only residence). The smaller property was then empty from 2009 and put up for sale for £220k, the idea was that dad would then be given the proceeds. The gifted property then became daughter 1 and husband's main residence. When the sister 1 and husband moved to the large house the smaller property that was put up for sale was transferred into daughter 1's name only.
Two years pass and smaller house is still up for sale. Daughter 1 doesn't really want the hassel anymore and transfers ownership to daughter 2. Daughter 2 rents the house out to tenents from March 2011 - Feb 2019 when she sells it for £180k following dad's death. All rental income etc has been declared by daughter 2.
No advice was taken before all the "gifting" and changes in ownership took place in 2009 and 2011. No documentation exists for the gifting other than a bill from a solicitor for the gifting between father and daughter 1 in 2009.
I'm probably overthinking this but do I need to worry about possible capital gains for daughter 1 prior to 2011 when my client became the owner of the empy property? I don't have any details for daughter 1 other than a name.
My second problem is the market value at March 2011 for CGT. How do I calculate that? The value in land registry is shown as less than £100k at the 31st March 2011. Daughter 2 doesn't know how the value was arrived at in land registry as dad dealt with everything her only thought is that is very low. The house was on the market for £220k with an estate agent. The only comperable property around that time frame is one a couple of doors down sold in Dec 2011 for £160k. The client is keen that I use the £220k to reduce the CGT to zero but I think this valuation was vastly inflated. Based on the switching around of properties etc and the driving force behind it (ie) dad who seemed to have the overall control I suspect that the MV had been inflated to avoid capital gains. It is impossible to get answers on valuation because dad dealt with everything.
I would be grateful for your thoughts.