What is base value of property for CGT?

What base value figure should I for CGT calculation

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Hi, my father-in-law gifted his property to my wife 20 years ago. He then passed away last year. My wife then recently gifted 50% of the property to me. We have now decided to sell the property. When calculating CGT I have 2 questions:

1) is my wife's base value of the property 100% the value as it was 20 years ago or 50% as she has since gifted half to me?

2) is my base value of the property 50% of the current value or 50% of the value as it was 20 years ago? 
 

thanks 

Simon

Replies (12)

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Psycho
By Wilson Philips
07th Dec 2020 22:04

You need to ask yourself whether the potential tax at stake is worth hiring a tax adviser to ensure that you get it right or whether the tax is insignificant so that it doesn’t really matter if you get it wrong by following the advice of some anonymous internet posters. For the record, my clients pay me for such advice.

(Your profile suggests that you are a company director - does the company not have an adviser that you can ask?)

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By NicoleM
07th Dec 2020 22:31

It depends.

When dad gifted to daughter, his CGT would be as follows;

Market Value @ gift
less cost

Dad would pay CGT on the gift.

If deferral relief was used, dad would defer the gain, by rolling over this capital gain against the base cost in the hands of his daughter. Essentially the relief transfers dad's CGT to his daughter. In this case the base costs when selling would be the original purchase cost and your wife's CGT would be much higher. In this case there would need to have been joint election.

However, would inheritance tax rules not apply in this case?

Transfers between husband and wife are at 'no gain no loss'.

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Replying to NicoleM:
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By Wanderer
08th Dec 2020 06:03

NicoleM wrote:

Dad would pay CGT on the gift.

If deferral relief was used, dad would defer the gain, by rolling over this capital gain against the base cost in the hands of his daughter. Essentially the relief transfers dad's CGT to his daughter. In this case the base costs when selling would be the original purchase cost and your wife's CGT would be much higher. In this case there would need to have been joint election.

Probably not, as per the OP's previous question it was probably Dad's PPR.
Obviously fact vacuum to be sure. More needs to be known.
Point about IHT is the one that's often overlooked in these situations however, again just relying on scant facts provided, may well be under the thresholds.
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By Paul Crowley
07th Dec 2020 23:28

Concur both
Find out the facts
BUT
1) is my wife's base value of the property 100% the value as it was 20 years ago or 50% as she has since gifted half to me?

If she sells half, it is half

2) is my base value of the property 50% of the current value or 50% of the value as it was 20 years ago?

NO start at 20 years ago
No uplift unless tax is paid

Best to get an accountant involved
I do not think the question demonstrates enough knowledge to even start at getting it sorted correctly

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By Wanderer
08th Dec 2020 05:21

Member Since: 4th Nov 2020
FerkinRa
Director Ethos

Simon Allen wrote:
What is base value of property for CGT?
What base value figure should I for CGT calculation

Hi, my father-in-law gifted his property to my wife 20 years ago. He then passed away last year. My wife then recently gifted 50% of the property to me. We have now decided to sell the property. When calculating CGT I have 2 questions:

1) is my wife's base value of the property 100% the value as it was 20 years ago or 50% as she has since gifted half to me?

2) is my base value of the property 50% of the current value or 50% of the value as it was 20 years ago? 
 

thanks 

Simon

Don't overlook Inheritance Tax. Could easily be one of those classic situations where BOTH IHT & CGT is incurred.
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By Wanderer
08th Dec 2020 06:05

Mmm, you have been advised on this before.

Simon Allen wrote:
CGT from death or point of acquisition?
My father-in-law gifted his house to my wife in 2000 and continued to live in the house rent free.

My father-in-law gifted his house to my wife in 2000 but continued to live in the property rent free. He was still living in the house when he passed away in 2019. We have now sold the house (in 2020) and are buying a property with the proceeds for our disabled son. My question is, are we liable for CGT? If so, is that based on the property value at the time it was sold minus the value when it is gifted, or the property value when it was sold minus the value when he died? He inherited the house from his wife on her death in 1999. The house value in 2000 was approx £40k and the sale price in 2020 is £110k. I'm so confused any guidance would be greatly appreciated. The

https://www.accountingweb.co.uk/any-answers/cgt-from-death-or-point-of-a...
Looks like the gift to you is a new fact you didn't include just a month ago. Have you failed the 30 day limit on returns & paying CGT?
Looks like there may be two CGT returns due now.
Also on 4 November you said you had sold the house but your question now says "We have now decided to sell" which could be interpreted as you haven't yet sold.
Ireallyshouldknowthisbut advised you then to get urgent help. Did you ignore that advice? Did you make the transfer from your wife to you without getting that help? Looks like this is getting more and more expensive for you. Tax Dragon did say "Paying fees saves money.".
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Replying to Wanderer:
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By Tax Dragon
08th Dec 2020 06:08

Looks like we crossed in the posting with similar thoughts! :)

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By Tax Dragon
08th Dec 2020 06:07

Was there a Deed of Variation in 2000?

It's no use presenting a forum of strangers (though maybe some of us are becoming recognisable to you) with partial facts and expecting a correct answer.

To be clear, the question you ask might not be the question that determines the tax. So getting an answer to that question - even the right answer to that question - might not give you the correct tax outcome. (To say the same thing again as simply as I know how: I cannot tell from what you have told us whether there is even any tax to pay.)

The company accountant might not be the person from whom you are best advised to seek help.

Paying fees saves money. I've said it before. I'll no doubt say it again.

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Replying to Tax Dragon:
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By Tax Dragon
08th Dec 2020 06:13

Tax Dragon wrote:

The company accountant might not be the person from whom you are best advised to seek help.

Though with luck they may be able to refer you to someone more suitable.

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By Software Seeker
09th Dec 2020 15:28

GWROB issue too?

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Replying to Software Seeker:
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By Tax Dragon
09th Dec 2020 17:10

OP doesn't need an answer. He needs an advisor.

An advisor would need to establish the facts. (We're not going to, even if we wanted to - e.g. I've asked about a DoV in both threads without reply.)

If a DoV was done in 2000, there may be no IHT or CGT (depending on what it said - and assuming it was prepared with the help of an advisor, it would have said the right things).

If it wasn't, there could be IHT (unlikely on the figures, but you never know) and/or CGT to pay.

But to your question... yes, GWROB is a (potential) issue. That was Wanderer's point.

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Replying to Software Seeker:
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By Tax Dragon
09th Dec 2020 17:12

.

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