Client has had a property acquired via their bank in Cyprus.
The open maket property value is (say) £100,000, but the bank offered a "forced sale" value of £70,000, being 30% below the OMV, or a "current market value" of £85,000, allowing for the fact the property is not easily marketable due to the loan which is (say) £150,000.
The bank agreed that in exchange for £15,000 payment, the bank would take control the property, and write off the debt. The client did have the option to sell the property privately and pay the bank £85,000 in lue of the debt (ie they write off the debt of £65k), or oddly to retain the property and pay £70,000 to write off the debt in full (so the bank write off £80k).
My client agreed to pay the £15k and walkaway.
However what is the disposal value for CGT purposes? Or is there actually a dispsoal?
Ordinarily in a repossession, the bank sells the property and your debt is reduced by that value, and they come after you for the balance, so the sales price is quite clear, and TCGA92/S26 (2) comes into play.
However this looks like an exchange of the property for loan write off, which under section (3), you normally work out as buyers payment + debt taken on = asset price. Which in this case would be the £150k less the £15k payment = £135k sales price.
Any useful pointers? I feel I am missing something here. I have got some of the legal docments, but they seem to relate largely to the loan write off, and nothing much about the aquisition by the bank of the property.
I doubt it makes any difference but it doesnt meet the FHL rules.