How do I value property if I became joint owner 6 years after purchase?

by Readers Question

14:03 PM, 30th August 2016
About 2 years ago

How do I value property if I became joint owner 6 years after purchase?

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How do I value property if I became joint owner 6 years after purchase?

I really hope you guys can help. My wife kept her property when we purchased ours. She let it out and then 6 years later we became joint owners of it. how to

We have sold the property. I understand how to calculate her CGT liability but, I never lived at the BTL property and as I gained the asset 6 years later how do I value the asset?

Or am I not calculating this correctly ?

Many thanks for any guidance

Mar and Bev



Comments

Jon Pipllman

14:50 PM, 30th August 2016
About 2 years ago

I don't definitively know the answer, but I am interested in it.

From reading this (https://www.gov.uk/capital-gains-tax/gifts)

"Your spouse or civil partner may have to pay tax on any gain if they later dispose of the asset.

Their gain or loss will be calculated from when you or they first owned it."

It looks as though your gain is calculated from the time your wife first owned the property. i.e. the total gain is simply split jointly between you and you are both taxed accordingly.

This advice seems to confirm that (http://www.taxexpert.co.uk/services/taxation-services/property-tax/cgt-on-sale-of-property-with-transfer-into-joint-ownership-2/)

"The existing CGT rules enable spouses to plan in advance and make appropriate transfers of assets (including property) one to another at no-gain, no-loss for CGT, before disposals. Therefore you would transfer, say 50%, of the property to your spouse prior to a sale so that 50% of the anticipated gain ends up on their tax return not yours. This would allow another annual exemption against the gain and hopefully taxing some of it at the lower CGT rate of 18% if your spouse is a lower rate taxpayer in the tax year in which the disposal is made."

S.E. Landlord

16:54 PM, 30th August 2016
About 2 years ago

If it was a buy to let from outset and assuming it was transferred into joint names after you married - on a joint tenancy basis or 50/50 if tenants in common - then you use the original purchase price and split the profit between you.

Puzzler

17:18 PM, 30th August 2016
About 2 years ago

What happens about Lettings Relief if only one of them lived there?

Jon Pipllman

20:51 PM, 30th August 2016
About 2 years ago

I think letting relief is available to both owners if it was let whilst in joint ownership.

http://www.accountingweb.co.uk/any-answers/cgt-ppr-lettings-relief

But do seek professional, qualified and insured advice rather than relying on anything in this thread

Sally Smith

9:50 AM, 31st August 2016
About 2 years ago

I also acquired part shares in a property. which I sold last tax year. I needed to get a surveyor to value the property as at the date I acquired it ie a backdated valuation. They then produced a document which I could use for tax purposes when I submitted my Capital Gains figures. I found it all quite complicated & so I employed a local tax expert (someone working alone not a large company) - cost less than £100 so well worth it in my opinion.

Jon Pipllman

10:35 AM, 31st August 2016
About 2 years ago

Reply to the comment left by "Sally Smith" at "31/08/2016 - 09:50":

If you acquired the share in the property other than from your spouse, then it could be more complicated.

Married couples are often treated differently by the tax code and, I think, this is an example of a situation where that happens

Fraser Maldoom

11:20 AM, 31st August 2016
About 2 years ago

May I suggest that the question is actually more about what valuation or valuations are required (which is a question for a competent accountant or other tax adviser) rather than how to value (which is a job for a valuer competent and experienced in tax valuations). So as not to appear or be taken as flippant or dismissive, I and my company fall into the latter category.
Take advice on the initial point first then instruct a valuer based on that advice.
http://www.capitalchartered.co.uk

Ravi gupta

12:06 PM, 31st August 2016
About 2 years ago

Hi Mar & Bev,
If you log in to Land registry and find the page called "How to Value your Property" it gives you a formula. I suggest you do not spend any money on getting the valuers, unless it is very very essential for any kind of proof you may need.
You will find the page for valuation which I believe is accepted by the Tax Office.
Good Luck & save money

Mark O'Dwyer

12:07 PM, 31st August 2016
About 2 years ago

Thanks everyone for the input.
It seems as we are married that it's taken as 50/50split and original value is used. My wife would get PRR and Letting Relief as she had lived there. Would I only get lettings relief then? Many thanks everyone who's posted. Mark.

Sally Smith

12:25 PM, 31st August 2016
About 2 years ago

Reply to the comment left by "Fraser Maldoom" at "31/08/2016 - 11:20":

Absolutely. That's exactly what I did. My accountant told me what type of valuation to get & on what basis it needed to be done. She then dealt with the tax side for me. Didn't mean to mislead but didn't want to make it sound too complicated. Just for clarity - I didn't acquire my share from a spouse.

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