CGT on gifts

Adly812

Wondering how CGT would be worked out in this scenario. If you’re selling a property gifted to you for £0 by a parent. 

Would the future CGT be calculated on the difference between the market value of the property on the date of the gift and the sold price? 

Or would CGT be calculated on the full sale price of the property, worked out as £0 value as it was a gift, so CGT on entire profit ?

Mark_d

CGT is based on the gain - so using market value at the time you were gifted the property.

Nomunnofun1

Not the question asked, I appreciate, but hopefully any CGT, if appropriate, was paid by parents at the time of the gift. 

Adly812

Nomunnofun1 said:

Not the question asked, I appreciate, but hopefully any CGT, if appropriate, was paid by parents at the time of the gift. 

Research stages at the moment with all this.  But yes absolutely, fully aware cgt liable for parent and simply understood how to calculate that. Just confirming how child works out cgt in future. Above comment reaffirmed my thinking and understanding from all the posts and google searches I’ve been reading. 

Adly812

Mark_d said:

CGT is based on the gain - so using market value at the time you were gifted the property.

Thank you this is what I’ve reached too in my understanding of how it’s all worked out, just needed to confirm. Thank you so much 

UnsureAboutthis

Mark_d said:

CGT is based on the gain - so using market value at the time you were gifted the property.

Exactly that
We had a property valued and gave it as a gift many years ago to one of our children as an investment for them. We paid the CGT on it. We also had a valuation letter from an estate agent where three prices were displayed EG, quick sale, long wait sale and a sale where the property was valued at a price where it was likely to sell within x number of weeks as per the average property of the same type in that area.
So above answer is spot on as things stand but could easily change with this lot.

Adly812

UnsureAboutthis said:

Mark_d said:

CGT is based on the gain - so using market value at the time you were gifted the property.

Exactly that
We had a property valued and gave it as a gift many years ago to one of our children as an investment for them. We paid the CGT on it. We also had a valuation letter from an estate agent where three prices were displayed EG, quick sale, long wait sale and a sale where the property was valued at a price where it was likely to sell within x number of weeks as per the average property of the same type in that area.
So above answer is spot on as things stand but could easily change with this lot.

Thank you for your experience. I understand that would be how you’d work out your cgt liability as the parents, or a RICS valuation when you gave it away.

I although in this context ask about the children’s future liability cgt. Would your children then use the valuation perhaps you received from the Estate agent at time of gifting,  as their own property value when asked what is was valued at when gifted? Using that figure vs their future sale figure to calculate their Cgt liability ? As opposed to £0 bought/gifted and being liable for cgt on full property sale. 

Mark d I trust is spot on? Market value, not gift value to work out the gain.

Nomunnofun1

Adly812 said:

UnsureAboutthis said:

Mark_d said:

CGT is based on the gain - so using market value at the time you were gifted the property.

Exactly that
We had a property valued and gave it as a gift many years ago to one of our children as an investment for them. We paid the CGT on it. We also had a valuation letter from an estate agent where three prices were displayed EG, quick sale, long wait sale and a sale where the property was valued at a price where it was likely to sell within x number of weeks as per the average property of the same type in that area.
So above answer is spot on as things stand but could easily change with this lot.

Thank you for your experience. I understand that would be how you’d work out your cgt liability as the parents, or a RICS valuation when you gave it away.

I although in this context ask about the children’s future liability cgt. Would your children then use the valuation perhaps you received from the Estate agent at time of gifting,  as their own property value when asked what is was valued at when gifted? Using that figure vs their future sale figure to calculate their Cgt liability ? As opposed to £0 bought/gifted and being liable for cgt on full property sale. 

Mark d I trust is spot on? Market value, not gift value to work out the gain.

One would absolutely use the valuation obtained at the time of the gift as the base cost for CGT. 

To use £0 simply because no monies changed hands is entirely wrong!

Bookworm225

Adly812 said:

Mark d I trust is spot on? Market value, not gift value to work out the gain.

as parents paid CGT at the point of gift to the child, then the value used in parent's CGT calculation becomes the value used by the child as child's acquisition cost 

If the parents "manipulated" the market value of the "selling price" for the benefit of their own CGT, that does not alter the acquisition cost for the child. If understated to save parents some tax then the child now picks up the consequence of a "low" acquisition cost.

Bear in mind the parents CGT calculation will have been reviewed by HMRC and they might have chosen to refer the values used in it to the Valuation Office Agency for them to check and accept. If parents CGT calculation has been confirmed as accepted by HMRC, then child's acquisition cost is now formally "ascertained" and will be the figure HMRC expect to see if / when child has to do their own CGT.

you cannot use different "market values" for the same point in time when passing between "connected persons" to whom the market value rule applies for CGT.
CG16330 - Assets: principles of valuation: meaning of market value - HMRC internal manual - GOV.UK

CG14580 - Connected persons - HMRC internal manual - GOV.UK

silvercar

General rule is SDLT is calculated on the price you paid (so zero on a gift) and CGT on the market value.

Did you live in the property as your principal private residence at any time since you took ownership? That would reduce your CGT liability.