CGT on spouse's death

CGT on spouse's death

Didn't find your answer?

Hi all,

My mother in law has a rental property which she wants to sell.

The house was bought in 1972 by her husband. In 1980 after they had married he gave half on to her (not sure if tenants in common or joint tenants but can find out if pertinent).

Shortly before her husband died in 2007 he passed his share to her.

On the title register it has her as the sole owner with an effective date of May 2007 and a value of £700k (no mention of the ownership structure before).

What will her CGT base valuation be for this property?

1. 1982 value
2. 50% 1982 + 50% £700,000
3. £700,000

Many thanks

M

Replies (11)

Please login or register to join the discussion.

Out of my mind
By runningmate
18th Apr 2015 03:45

Or

4. None of the above.

RM

P.S. Hindsight is a wonderful thing - but it looks like his passing his share to her shortly before his death was an unfortunate move!

Thanks (0)
Replying to simongroupcm:
avatar
By MSpy
18th Apr 2015 08:38

What would it be then?
Thought it would be one of the 3

Thanks (0)
avatar
By cparker87
18th Apr 2015 09:05

No I don't think so
Welcome others thoughts but I reckon it would only be uplifted if passed through the estate not as a PET.

He transferred it during his life under CGT and NGNL provisions kicked in. The base cost of the husband was acquired by the wife.

Thanks (0)
Portia profile image
By Portia Nina Levin
24th Apr 2015 15:57

(No subject)

Thanks (0)
Replying to I'msorryIhaven'taclue:
avatar
By cparker87
18th Apr 2015 09:21

I agree with 1

Portia Nina Levin wrote:

Is 1, which is a number less than 4. Or would somebody care to disagree with me?

But also don't forget any uplift for any enhancement expenditure since March 1982

Thanks (0)
Out of my mind
By runningmate
18th Apr 2015 10:32

How about 4?

Since there was a transfer between spouses prior to 5 April 2008 my thinking is that there would be some RPI indexation uplift 'banked' on that transfer.

So I am going for a base cost calculated as 0.5 x (1982 value) + 0.5 x (1982 value) x (RPI uplift between March 1982 & April 1998).

See https://www.accountingweb.co.uk/topic/tax/last-minute-tax-planning-have-...

RM

Thanks (0)
avatar
By pauljohnston
18th Apr 2015 10:33

Runningmate

Will not your answer be affected by whether it was a joint tenanacy(JT) or tenamts in common (TC).

If JT the husband had no half to give unless it was converted into a TC.  I think it became TC at that point.  Thus the half share benefits from 1982 Value.  Gift prior to death of other half is 1982 value plus RPI from 1982

Thanks (0)
Out of my mind
By runningmate
18th Apr 2015 10:45

@pauljohnston

I do not think it matters whether it was previously held as joint tenants or tenants in common.

If it was H & W joint tenants & H gifted his interest to W then H comes off the title & W owns as sole proprietor.  I believe that qualifies as a gift of his 50% interest to her.

I assume the transfer was made in 2007 precisely in order to 'bank' the CGT indexation.

It was seen as a good tax planning move at the time - but seems to have misfired in this case because H died shortly afterwards (& his share could have passed to W free of CGT & with 'current' base cost on his death).

RM

Thanks (0)
avatar
By pauljohnston
18th Apr 2015 11:13

@runningmate

I quote "if it was H & W joint tenants & H gifted his interest to W then H comes off the title & W owns as sole proprietor"

This is getting a little confusing so you are saying

 

H gifted half share to W in 1980.  W aquires half at 1982 Value

H Gifts his 50% share in 2007 to W.  W acquires his share plus RPI

Therefore her CGT Value is 1/2(1982 Value plus RPI 1982-1998) plus 1/2(1982 value ).  I feel because the RPI element on the second giftwas not available - it had been removed in April 1998.

Do you agree?

 

 

 

Thanks (0)
Out of my mind
By runningmate
18th Apr 2015 11:20

RPI uplift

I believe the limited RPI uplift was available in respect of gifts made before 6 April 2008.

RM

Thanks (0)
Portia profile image
By Portia Nina Levin
24th Apr 2015 15:58

(No subject)

Thanks (0)