Calculating Capital Gains Tax

Fancyfoot

Hi, My Mum transferred ownership of her house in 1994 to my sister and myself in a Trust will. We inherited the property in December 2017 when my Mum passed away ; my sister then passed away in May 2022 and left her half of the property to her partner. He is now buying my half and, as this is classed as my second property, I realise that I have to pay CGT on the gain in value. Do I calculate the difference in the value of the property from 1994 (the year I acquired ownership) to 2024 or from December 2017 (the date I inherited property) to 2024 ? If the former is the case, will HMRC accept a valuation from Nationwide House Price Index or is there another way of obtaining one ? 

Thank you for any replies 

Keep_pedalling

I am confused, a will trust only passes ownership on the death of the testator are you sure that is what it was? 

sheramber

Keep_pedalling said:

I am confused, a will trust only passes ownership on the death of the testator are you sure that is what it was? 

We inherited the property in December 2017 when my Mum passed away

[Deleted User]

[Deleted User] said:

Fancyfoot said:

Hi, My Mum transferred ownership of her house in 1994 to my sister and myself in a Trust will. We inherited the property in December 2017 when my Mum passed away 

I think you need to describe a bit more about the trust and you and your mum's relationship to the trust. You also mention "Trust will" and that suggests that the trust related to someone's death. 

Your could gain might be based on the value in 1994 or it might have been based on the value in 2017 depending on your answers.  Or your use of "Trust will" might mean it's a bit of each.

It's your responsibility to decide what value is right and, if there's uncertainty, you'd want to include full disclosure of the details of how you worked out the value with your tax return to limit the time that HMRC have to challenge the value.  If the use of "Trust will" did mean that it related to someone's death in 1994 then there might be a probate value knocking around somewhere that you can use. Similarly, your use of "inheritance" might mean that there is a 2017 probate value.

I have no idea whether using a house price index is sufficient for HMRC in relation to 1994 but my starting point is that it alone would not be.  If, knowing the full facts, you thought that it was then I'd suggest you create a good narrative as to why it is appropriate.  Unless the amounts were relatively small, and 1994 was relevant, I'd talk to a surveyor and see what approach they would suggest and how much it would cost. 

When HMRC look at your tax return disclosure they'll decide whether to refer it to HMRC's Valuation Office Agency to check the value.  That could be hassle and so may make sense to engage a surveyor before hand if 1994 is relevant.


 

Agree - the Nationwide price index will not be acceptable. The correct approach would be to obtain a professional formal valuation to be able to stand over most likely when, not if, HMRC engage the district valuer. 

Fancyfoot

Very many thanks for all your replies and I appreciate the time you have all spent in answering my query. I clearly need to obtain some more clarification on the Trust Will before making any decisions. This is new territory for me and, in the light of your comments, it may be wiser to engage some professional help. Thank you all again.