Date of sale for CGT purposes

When is a house considered as sold for CGT purposes

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A client sold an inherited property at auction, they believe that the contracts were exchanged 10th April 2024, the auction date was in January 2024, the property was inherited by 3 siblings. At what date is the property treated as sold for CGT purposes. 

Replies (14)

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paddle steamer
By DJKL
21st May 2024 14:41

When the contract for sale was unconditional.

Or up here when one has missives concluded with nothing suspensive except delivery of what the missives describe will be delivered.

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By More unearned luck
21st May 2024 15:19

I'd have thought that the contract would have been concluded when the hammer fell. Contracts for the sale of land only have to be evidenced in writing; they doesn't have to be written contract. Check the auctioneer's T&Cs. Caveat: IANAL.

BTW, I assume that your client is one of the three siblings. How did he or she acquire the other 2/3rds interest? Your description of the property as 'inherited' does not seem to fit the other brief facts given. Impressive: contradicting yourself within the same sentence.

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Replying to More unearned luck:
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By CW2012
21st May 2024 15:28

Thank you, yes the original question could have been written a bit better but as you have guessed one sibling is our client, the property has been left to all three equally.

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By FactChecker
21st May 2024 16:03

Whilst not understanding the legalese around the terminology of selling a property (and the unfortunate fact that it varies depending on nation - sorry DJKL), I thought that CGT liability was always triggered as at the date that the sale was 'irreversible' (to use a non-lawyer term).
Which is why, for instance, sale of a business with staged payments results in CGT liability on the *whole* amount as at the date of the sale agreement (even if some payments aren't due 'til the next tax year or even the one after that).

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Replying to FactChecker:
paddle steamer
By DJKL
21st May 2024 16:41

I concur- as at an auction there is usually a period to check various matters vis a vis auction information given, and if incorrect then buyer can walk (as they very often do, whether they always get deposit back is another matter) am not convinced at hammer drop there is always a contract- offer/acceptance/consensus needs to be in place, and with latter both seller and buyer require to be agreed what is being sold and bought and in what condition and on what terms (price is not all) For instance longstop date otherwise bound to sell but no term as to how long buyer has to pay, an open missive is dangerous.

Here we exchange letters (missives) between solicitors binding their clients e.g, I offer to sell x to you for £y, I accept your offer subject to a retention of £a to cover the outstanding statutory repair displayed within the PEC you exhibited, I accept your modification re retention subject to included a settlement longstop date OF XX/XX/XXXX, I accept your recent letter regarding settlement longstop date of xx/xx/xxxx and now hold the bargain to be complete.

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DougScott
By Dougscott
21st May 2024 16:37

I would say it is the date registered at the Land Registry as the date of purchase.

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Replying to Dougscott:
paddle steamer
By DJKL
21st May 2024 16:48

Up here that could be months after submission to LR, they are often well over as year behind re issuing new land certs. It is surely the date of the unconditional contract .

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14260

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Replying to DJKL:
DougScott
By Dougscott
22nd May 2024 08:15

It may take the Land Registry a while to issue a certificate but isnt the registered date the same as the sale date?

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Replying to Dougscott:
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By More unearned luck
21st May 2024 19:44

Ignoring the fact we are trying to establish the sale date and not the purchase date, the question is "what is the date of sale for CGT purposes", the OP is not asking about the true date of sale (and I doubt that the date of registration is that date - if relevant, in Higgins the CoA and the FTT held that completion was the date that ownership changed). Section s 28 CGTA is designed to remove doubt and argument about when is the date of sale (or purchase) for CGT purposes. It says that in the case of an unconditional contract that date is the date of the contract"

On your view: if you were selling and died after completion (ie after receipt of the proceeds) but before registration on the LR your estate would include both the sold property and the proceeds from its sale!

These English solicitors say here, in the context of buying a house at auction:
https://bestsolicitorsonline.co.uk/buying-a-house-at-auction-what-is-the....

"Where you attend an auction, raise your hand to make a bid and are the successful winner, contracts are legally exchanged as soon as the auctioneer’s hammer falls."

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Replying to More unearned luck:
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By CW2012
22nd May 2024 09:35

Thanks, interesting article, I read somewhere that the CGT sale date and the date used as the starting point for the 60 day CGT return aren't the same, the 60 days apparently starts at the date of completion, whereas the CGT sale date is the exchange date.

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Replying to CW2012:
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By Tax Dragon
22nd May 2024 10:26

That's correct.

Further, if the contract was binding in 2023/24 and you submit a tax return for that year which includes the CGT [ie the tax, not just the gain] that the 60-day return would have included, and do so before the 60-day date, you can dispense with the 60-day return.

Please note my "if" - I didn't say "because" or "since" or similar.

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Replying to Tax Dragon:
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By CW2012
22nd May 2024 10:59

Thanks , that throws up some more quirks, our client files an SA Return each year so the 23/24 tax year will include the gain as the auction date was Jan 24, sadly this is more than 60 days prior to 10th April completion date, which is in a different tax year and therefore there appears to be two dates for the tax to be payable, one 31st January 2025 and another 10th June 2024, am I right in this, which is the correct tax payment date.

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Replying to CW2012:
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By Tax Dragon
22nd May 2024 11:09

You previously said 10th April was exchange date. That doesn't stop it also being completion date, but those are different things.

Payment date is 60 days after completion unless the tax has already (ie before the 60-day date) been included in an SATR. The payment date then is 31 Jan following.

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Replying to Tax Dragon:
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By CW2012
22nd May 2024 11:27

I wish I had reread the initial query and not rushed it out, anyway, our client informed me that they were told the exchange date was 10th April 2024, when I heard it was an auction sale in Jan 24 this lead to question when the tax point was, I think via the answers to my ropey question, I now have a potential position to work from. One lesson learnt reread the posting. Thanks

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