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CGT on sale of property & deed of variation

How is the CGT assessed on sale of joint property after deed of variation of deceased co-owner

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Can you members help on this as i have been going round and round on this one

A&B own property worth 400k, 50/50 as tenants in common. A dies leaving residue to B (which includes the property) and a discount is claimed on half share for IHT value agreed with HMRC at 170k. B dies whilst estate of A is being adminstered. A deed of variation is executed to divert residue of A to pass it direct to the beneficiaries of the estate of B but to keep it outside of B's estate for tax purposes. A's estate is administered in full i.e. clearance obtained, residue ascertained and the executors then sign an assent of A's half share of the property to pass to the executors of B. The executors of B then sell the property for 600k. How is the CGT on A's half share assessed? I think there are 3 possiblities.

1. It is assessed on the beneficiaries of the DOV on the basis that by the time the property is sold the executors of A held the half share on bare trust for the beneficiaries and so they can use their annual exemptions and the later assent made no difference

2. It is assessed on the executors of B following the assent and so the whole of the gain on the property is on the executors of B with only one annual exemption

3. It is assessed on the executors of A -  seems unlikely

Any help appreciated. I presume whichever it is the base cost of that half is 170k.



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By Michael Davies
17th Dec 2021 12:30

You need to speak to a STEP as to whether it was good IHT /CGT planning,on this variation.I try to avoid IHT ; however CGT base cost A probate value and the other half B probate value.Presumably B probate value higher than A probate value.I assume increased CGT due to variation is less than IHT saved.

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