Help! Is capital gains tax payable

edited 30 November -1 at 1:00AM in Cutting Tax
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  • Just something I've noticed....

    They actually bought the house in November 1981 (not September 1982 as I quoted). This would therefore increase the indexation allowance right? This explains why I used 1.047 as the IA factor in my original calculation.

    Every little helps! :-)
  • Thanks Jimmo!

    Referring to your points:-

    1) The house was an ex-authority house so is likely to be the reason for the low purchase price. Would it really be worth it for 3/4 months difference, if so, who would I go to to get a back dated valuation as at 31/3/82?

    3) The windows replaced single pane glass with metal frames (typical of authority houses I believe!). I think this should definitely be deemed an improvement rather than repair.

    4) Referring to your point re: IHT - there was none due as Dad's estate value was below the threshold.

    Therefore do you think for the purpose of getting a market value for the property at this time (Dad's death Feb 1995), would it be possible to use the selling price of a neighbouring house which is exactly the same house? The reason I ask is that a neighbour bought their house 3 months before Dad died so I thought this value would be a relevant/reliable market valuation. I also think it might help by increasing the cost figure instead of using probate value, thus reducing the overall gain.

    Thanks again
  • Thanks Jimmo

    Apologies - Yes the full purchase price was £10,500.

    I've got mum on the case today of booking an appointment to see an Accountant and totally agree that professional advice is needed.

    However, not only do I want to understand the situation more indepth for myself, I also wanted to try to reduce the cost a little by doing a lot of the leg work myself and presenting them with the full case scenario, including all the necessary paperwork, valuations etc so they could just pull it all together and present to HMRC on Mum's behalf.

    I telephoned HMRC (without identifying myself) and said that I had been sent a self assessment for 2005/2006 and how long did I have to submit it, as due to the period it covers I don't have all the necessary paperwork etc to complete the SA immediately - they told just to submit it as soon as possible. That's not to say I'm going to sit on it for months on end, just wanted to make sure we didn't have an unrealistic deadline to meet.

    All your points have been taken on board, will let you know how we get on.

    Thank you! :-)
  • terrywterryw Forumite
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    <snip>
    I've got a copy of the land registry, however it doesnt state the price Mum & Dad paid for the house - Any ideas how I can get confirmation of this? Also, obviously they would have incurred costs at the time of buying the property - what would be a reasonable amount (if any) to declare being as Mum can't remember what they had to spend to acquire the house?

    FWIIW, I had a similar problem some years ago in calculating CGT and to arrive at the value on a certain date I trawled the old newspapers at the local library (probably on microfiche or computer nowadays) for similar properties in the locality.
    I found about five such properties for sale, photocopied these and sent them to the tax people with the calculation. I took my property as being the average. This value was accepted without any question. I know that if the HMRC disagree with a valuation, they involve the District Valuer, but I think that he will not involve himself as he can only do the same as you! In any case, the values then were so low that any difference in opinion is likely to be really trivial by todays figures.

    I agree that is probably best to use an accountant here, but do this bit of spadework first as it will save you the cost of the accountant doing it!

    terryw
    "If you can bear to hear the truth you've spoken
    Twisted by knaves to make a trap for fools"
    Extract from "If" by Rudyard Kipling
  • silvercarsilvercar Forumite, Board Guide
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    Jimmo, always eager to learn from your experience.

    I posted this:
    I think the PPR calculation is wrong. For the original half purchased there would be PPR releif as she did live in it as her home, so would get PPR relief for the time it was her home and the last 36 months of ownership. For the half she inherited, she never actually lived in it as her home during her period of ownership (though she did before she owned that half obviously). I'm therefore not sure if she would be eligible for PPR relief on the gain attributable to that half of the house.

    The only comparison I can think of is when an adult inherits a home from a parent and rents it out. They are liable to CGT on all the gain with no PPR even if they lived in the house as a child ie to gain PPR relief you have to have lived in the property as your PPR while you have ownership.

    further back and you posted:
    PPR is fine but its getting late now so will try and add a few more comments tomorrow.

    Is there a simple explaination?
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  • Just a question.....and I might be really clutching at straws here.

    Is there any election Mum can do 'today' (and legally) which could backdate a 'gift' of the percentage of the house to me and my brother?

    Not only would this enable us to claim PPR on a percentage of the house from when Mum left, to when it was rented out (1988 - 2001). More importantly, we could make use of the additional capital gain exemption from me & my brother when the sale occured.

    A long shot I know......but the Accountant in me is screaming out to get the liability down to nothing (but legally of course).

    BTW - appointment made with the Accountant for 3pm Tuesday.
  • silvercarsilvercar Forumite, Board Guide
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    Thanks jimmo, understood now I think.

    If I can make a suggestion on reducing the tax bill. If you pay an amount of tax now that should more than cover the potential bill, you will (a) put a stop to the on going interest being charged on the outstanding amount and (b) demonstrating a willingness to sort the matter out in a timely fashion.
    Usually found at a vaccine centre 💉
    I'm a Board Guide on the Debate House Prices & the Economy, House Buying, Renting & Selling, Mortgages and Endowments, In My Home incl DIY, Overseas Holidays & Student boards.
    I volunteer to help get your forum questions answered and keep the forum running smoothly.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to [email protected]. Any views are mine and not the official line of moneysavingexpert.com.
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