Self Assessment of CGT from house sale

alternate

I would be grateful if anyone can check this sample calculation. thanks

Time line.

1990: Husband : Gifted house from parents market value £100,000.
2010: House put in joint names with Wife.
2016: House sold for £200,000. Costs of £2000.

Return.

Husband.

Disposal proceeds £100.000 (50% of sale price)
minus £1,000 (50% of costs of sale)

Date of acquisition 1990
cost or market value £50,000 (50% of market value in 1990).

less deductions £11,100 (personal allowance)

chargeable gain £37,900

Wife.

Disposal proceeds £100.000 (50% of sale price)
minus £1,000 (50% of costs of sale)

Date of acquisition 2016
cost or market value £50,000 (50% of market value when husband originally acquired asset).

less deductions £11,100 (personal allowance)

chargeable gain £37,900

few questions

1,Husband has date of acquisition as 1990 and value of 50k. In 1990 the value was 100k because he would not give half to his wife until 2010 - but I am right in assuming the figure here should be 50k - or else the calculation would not work.

2.It asks your to submit you worksheet. Is that just specifying how you got the figures? Can I just add extra information such as the timeline in there or is there a specific format it needs to be in?

3.I was informed that for spousal gifts you take the market value of when the gifting partner first acquired the asset (in this case 100k in 1990) and not the value at time of spousal gift. How do you express this in the workings so that the tax office can see what figures you are using?

4. Is "Deductions, if any, in respects of reliefs and elections" the right place to put the 11,100 CGT allowance?

thanks

[Deleted User]

1. It should be £50k - personally I would also show your spouse's date of acquisition as 1990. Transfers between husband and wife are on a no gain/ no loss basis.

2.I don't think that there is any need. Simply put half of each figure on each tax return. If HMRC want an explanation they will ask for it. Don't ever invite queries.

3. You are correct in relation to spousal gifts. As with 2 above. On each return - Disposal of half share in property £100000 less cost price £50000 less costs of sale = gain before exemptions. There is no need for any further explanation in my opinion.

4. It is not.This would refer to, for example, private residence reliefs etc. The exemption will appear in the calculation.

Keep_pedalling

Did you never live in this house?

alternate

[Deleted User] wrote:

1. It should be £50k - personally I would also show your spouse's date of acquisition as 1990. Transfers between husband and wife are on a no gain/ no loss basis.

2.I don't think that there is any need. Simply put half of each figure on each tax return. If HMRC want an explanation they will ask for it. Don't ever invite queries.

3. You are correct in relation to spousal gifts. As with 2 above. On each return - Disposal of half share in property £100000 less cost price £50000 less costs of sale = gain before exemptions. There is no need for any further explanation in my opinion.

4. It is not.This would refer to, for example, private residence reliefs etc. The exemption will appear in the calculation.

Thanks for that. I would have messed up on 4. if I had not asked

So you don't think I need to put an explanation or timeline as an addendum?

It does ask for how you come up any estimates so I will need to provide something for the 1990 figure. It was valued for council tax purposes around that time so I am planning to use that as a guide - I am sure it was only a drive-by valuation but I guess it is an official figure of record.

Keep_pedalling wrote: »

Did you never live in this house?

Unfortunately not, I can't claim it as a primary residence.

[Deleted User]

alternate wrote: »

So you don't think I need to put an explanation or timeline as an addendum?

It does ask for how you come up any estimates so I will need to provide something for the 1990 figure. It was valued for council tax purposes around that time so I am planning to use that as a guide - I am sure it was only a drive-by valuation but I guess it is an official figure of record.



Unfortunately not, I can't claim it as a primary residence.

Now that changes things! I had presumed that an actual valuation was done at the time of the gift.

You would now need to explain your valuation at that time in the additional information box. As none obtained at the time HMRC is duty bound to determine this and will appoint its own valuer, regardless of what you put. Accordingly I would approach a local valuer/ estate agent and ask them to provide a formal valuation of the property at the time of the gift. You should be able to do this for a couple of hundred pounds which will be well spent. HMRC will give more credence to calculations if you have gone some way towards backing up your figures as opposed to conjuring up an estimate which, you have to admit, is a bit of a 'round number'

alternate

I did look in to getting a 1990 valuation when I sold the house and to be honest nobody seemed that interested in taking the job. It was the estate agent that suggested using the council figures and the guy admitted he would just tweak those. The band covers about 10k (e.g. 95k-105k) so putting it in the middle would be somewhat an educated guess. Although I would admit having a professional valuer sign off on a figure would carry a lot more weight.


TBH with a month until the filing deadline I might not have time to get anything better. Maybe if I had planned ahead when I still had access to the house ... but too late now.

[Deleted User]

In that case fill in the return and state that the £100000 valuation is an estimate. There is a question somewhere along the lines of 'have you used any estimates in your return' and provide details in the additional information box. As i stated before HMRC will appoint their own valuer in any case. (I have experienced the situation where they have used the very same valuer who came up with the estimate!) No big deal!

alternate

Thanks. I guess the worst case is the valuer pitches a bit low and I am on the hook for a little more tax. It won't be the end of the world.

I looked it up and the band is about 10k (e.g. 95k - 105k) so hoping the worst case is they value it at 95k.