Capital gains tax on gifted equity?

Capital gains tax on gifted equity?

10:48 AM, 10th August 2021, About 3 months ago 8

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I have sold a buy to let property and are now looking at filing my CGT return within the 30 days. One thing I am unsure of is that because the property is jointly with my brother now, however, it was purchased equally in 3 names (with my uncle) in 2009 but in 2016 he gifted his share of the property (1/3) to myself and my brother equally.

Am I right in thinking for me, it should be 1/3 of the increase from 2009 to 2016 plus 1/2 of the increase from 2016 to 2021 in which case how do I establish the value of the property in 2016, would it be based on the lender’s remortgage value?

Many thanks

Josh

Editor Note: HMRC CGT calculator >> https://www.gov.uk/tax-sell-property/work-out-your-gain



Comments

by Neil Patterson

11:07 AM, 10th August 2021, About 3 months ago

To assist, I have added the HMRC CGT calculator link above 🙂

by Mark Smith (Barrister-At-Law)

11:12 AM, 10th August 2021, About 3 months ago

The 2016 value you use should be the same as that used by your uncle when he declared his CGT on the gifts to you and your brother.

by Alex Norian

8:29 AM, 11th August 2021, About 3 months ago

Agree with Mark above.

If unable to access the MV used by your uncle for whatever reason, an estate agency valuation would suffice or you can use HMRC's own valuation service - see below link (don't hold your breath! You will need to estimate for purposes of 30 day payment if this route used).

https://www.gov.uk/government/publications/sav-post-transaction-valuation-checks-for-capital-gains-cg34

Any evidence used to establish the MV at 2016 should be retained in the event of an inspection.

by David Mensah

9:27 AM, 16th August 2021, About 2 months ago

Hi Alex,

I've been informally advised by my accountant that an estate agency valuation is not good enough. Do you have any experience showing that HMRC will accept this? It would save me a surveyor fees.

also, many thanks for the cg34 link, never seen that before. Love property118!

by Alex Norian

10:24 AM, 16th August 2021, About 2 months ago

Reply to the comment left by David Mensah at 16/08/2021 - 09:27
As if often the case, there is a sliding scale here and a pragmatic approach means "not good enough" is not easily defined.

Ultimately, "will HMRC accept the valuation?" is a question that will depend on the figure as much as the source. You will need to denote on the return that the figure is an estimate and this is likely to prompt a sense-check on the valuation used.

See further reading - https://www.gov.uk/capital-gains-tax/records

I have known cases where HMRC have accepted estate agency valuations - but this does not mean that all estate agent valuations will be accepted.

It is about building a case as robust as you can, in the absence of having the records from the time of the transaction.

If this means obtaining multiple estate agency valuations and averaging, using a surveyor or HMRC's own professionals, these are the decisions that need to be made.

You might consider a call to the direct CGT helpline at HMRC, for extra peace of mind with your chosen route - 0300 200 3300.

My pleasure re: CG34.

by David Mensah

10:47 AM, 16th August 2021, About 2 months ago

Reply to the comment left by Alex Norian at 16/08/2021 - 10:24
very helpful, many thanks Alex!

by Alex Norian

13:01 PM, 19th August 2021, About 2 months ago

Reply to the comment left by David Mensah at 16/08/2021 - 10:47
Consider Hometrack as a valuation method too - it's used by 13 of the top 15 UK mortgage lenders and costs about £20.

https://www.hometrack.com/uk/

by David Mensah

15:55 PM, 19th August 2021, About 2 months ago

Thanks, I have always used the Landregistry index
https://landregistry.data.gov.uk/app/ukhpi/browse?
for relatively small gains submitted to HMRC (usually under the allowance)

My banker uses Hometrack, and I now see that this is apparently a trend.


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