CGT and hometrack valuation

poseidon1

I would add that there are subtle nuances and distinctions between English trust law for life interest beneficiaries and Scotland's Life Rent system- link to HMRC manual below refers

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg31301#:~:text=In Scotland the expression 'liferent,he has a proper liferent.

OP suggested she intially inherited her dad's share of the property on his death.

 However as indicated by Keep_pedalling a form of IPDI trust could well have been created for that half share, albeit it appears this could happen without a formal trustee having been appointed (HMRC link above refers). As recommended, OP needs to closely examine the  Will in this regard and if not sure of its interpretation ( Scottish terms of art may be in point) , post the relevant (appropriately redacted) wording here.

If a liferent did occur on 1st death, it would certainly simplify the valuation issue, since as further advised by Keep_pedalling only market value of the entire property on mother's death would be  in question rather than a blend of two separate valuation points. As to what that value should be Jeremy535897 has covered that comprehensively.

bigbeary

Thanks. I've had a good look at the will and it doesn't really say anything that makes me think there's a life rent. Which is really odd because it makes sense to do so. It says something like my half share as "her own absolute property"

bigbeary

I think that they are okay. Basically we had a kitchen and bathroom that hadn't actually been updated for about 25 years. So had to go back to brick basically and it's a massive improvement.

Can you help me understand a little about the probate value? From what I'm reading you're saying that that value isn't actually binding and hmrc will not be looking at what I submitted for probate but what the VOA estimate the values at the time to be? 

 It's just that I asked a similar question on another forum and the people there were of the opinion that the probate value is legally binding and I don't see how it can be when it wasn't validated. 

I'm tempted to get a Rics surveyor out and get some valuations from them but it's just a finger in the aur really because obviously they don't know what it was like at that time. 

mybestattempt

bigbeary said:

I think that they are okay. Basically we had a kitchen and bathroom that hadn't actually been updated for about 25 years. So had to go back to brick basically and it's a massive improvement.

Can you help me understand a little about the probate value? From what I'm reading you're saying that that value isn't actually binding and hmrc will not be looking at what I submitted for probate but what the VOA estimate the values at the time to be? 

 It's just that I asked a similar question on another forum and the people there were of the opinion that the probate value is legally binding and I don't see how it can be when it wasn't validated. 

I'm tempted to get a Rics surveyor out and get some valuations from them but it's just a finger in the aur really because obviously they don't know what it was like at that time. 

On the subject of probate/date of death valuations only-

Probate/date of death values are binding for capital gains tax purposes if they are "ascertained" because IHT was due.

In your case, where no IHT was due on the estates of either parent, the probate/date of death valuations you used to arrive at the value of their estates have not been "ascetained" hence the need to establish the probate/date of death value(s) for capital gains tax purposes when the property is sold/disposed of:

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg16251

RICS surveyors are qualified to provide historic valuations which will take into account factual information about the property and the property market at the time.

Jeremy535897

bigbeary said:

I think that they are okay. Basically we had a kitchen and bathroom that hadn't actually been updated for about 25 years. So had to go back to brick basically and it's a massive improvement.

Can you help me understand a little about the probate value? From what I'm reading you're saying that that value isn't actually binding and hmrc will not be looking at what I submitted for probate but what the VOA estimate the values at the time to be? 

 It's just that I asked a similar question on another forum and the people there were of the opinion that the probate value is legally binding and I don't see how it can be when it wasn't validated. 

I'm tempted to get a Rics surveyor out and get some valuations from them but it's just a finger in the aur really because obviously they don't know what it was like at that time. 

It is worth claiming the kitchen and bathroom expenditure. HMRC do not treat the swapping of one kitchen or bathroom as an improvement if all you are doing is replacing a series of cupboards or a suite, but it sounds like you have done much more than that.
As has been said, HMRC only consider themselves bound by an IHT valuation if some IHT was payable on the estate.

silvercar

It may be relevant here that the value of half a property would be lower than half the value of a whole property. 

Jeremy535897

silvercar said:

It may be relevant here that the value of half a property would be lower than half the value of a whole property. 

Indeed. For tenants in common, you look at around 10%.

Bookworm105

Jeremy535897 said:

silvercar said:

It may be relevant here that the value of half a property would be lower than half the value of a whole property. 

Indeed. For tenants in common, you look at around 10%.

for avoidance of doubt he means 10% off the value of half of the whole

Bookworm105

bigbeary said:

I'm tempted to get a Rics surveyor out and get some valuations from them but it's just a finger in the aur really because obviously they don't know what it was like at that time. 

they are expert at working out historic valuations 

to find one search by name of town (sadly postcodes do not work) and in the left hand menu scroll down to accreditations and tick "registered valuer"
https://www.rics.org/networking/find-a-member.html

bigbeary

Thanks so much. I really appreciate all this insight. I'll keep my answers in one response

I think kitchen and bathroom are OK because of the entirety concept. Complete upgrade of everything. I have all the receipts and quotes and will include this in my submission

I'll definitely get some RICS valuations - I have seen a site called Desktop Valuations - are these OK? They are much cheaper and as the property is not where I live it would be easier to do this now, rather that when I go up. Next visit up is to sell (Council tax doubling for second home owners....:-))

I absolutely get your point about 50% of a house . You can't sell it at that value- so I am not sure why it's included at 50%. Would I be able to calculate CGT at 90% from the time I inherited the full property then? This would save me 3k in Tax, even on the original figures. Is this the sort of scenario where I would be better to get an accountant to prepare the submission? Am I more protected if HMRC disagree - and what roughly should this cost me? 

However If I don't ask an accountant - would I be advised to upload my workings and this assumption about the 50% value, or just keep in in case of a challenge. I'm a bit wary about this as I think that if you upload stuff it gets more scrutiny than 'system checks against VOA and if the other deductions looks reasonable it just goes through.