Share this content
0
424

I have a question on CGT .  

CGT

 

A client & his wife had purchased his mother's house back in 2007 (at the cost of the outstanding mortgage of £71K).  At that point the MV would have been £90K

His mother lived on in the house until her death in 2018.  It was sold for £167K.  The chargeable gain after allowing for aquisition costs and disposal costs is a total of £83K.  (This has been calculated using the actual purchase cost of £71K).  No reliefs have been allowed as the clients never lived in the property or rented it out.

Would there be any way to value the acquisition at £90K and have the difference of £19K treated as a PET for IHT?

 

Replies

Please login or register to join the discussion.

avatar
29th Nov 2018 17:10

Your starting point for the base cost should be the market value at the date of acquisition, as a connected party transaction. Bear in mind that determining the market value could be tricky if, for example, your client's mother retained a right to occupy the property when it was gifted.

Thanks (0)
avatar
to trust.pem
29th Nov 2018 17:25

What would your view be of the suggestion that the apparent £19,000 discount was (in essence) in lieu of rent?

It's just a guess of course. As ever, facts are lacking in what we have been told.

Thanks (0)
avatar
to Tax Dragon
29th Nov 2018 21:49

I wouldn't go there without any paperwork in support. I wonder whether any rent has been declared for income tax purposes....

Forget about the PET. I suspect there is a GWROB so chances are the property was still in mother's estate when she passed away this year.

Thanks (1)
avatar
By MaryTK2
to Tax Dragon
30th Nov 2018 09:51

Yes, it could be seen potentially as a discount in lieu of rent
Thanks

Thanks (0)
avatar
By MaryTK2
to trust.pem
30th Nov 2018 09:49

Thank you . Yes apparently the mother was finding it difficult to pay the mortgage and it was agreed she would continue to live there and also rent free.

Thanks (0)
avatar
29th Nov 2018 19:31

If only your client had taken advice back in 2007.

Thanks (1)
Share this content