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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15945
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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GA-RP Could you pls review this case:I have inherited an overseas

Customer Question

Could you pls review this case:
I have inherited an overseas property in 2011.
The asset was in dispute for over 4 years, where the legal owner was uncertain.
The problem has been sorted out in 2015.
In 2015, I'm planning to sell the property.
I didn't do a property valuation in 2011 (because I was not the legal owner as a result of the legal dispute).
Can I use either of the following methods to determine the capital gain:
A. Use an official property price index to estimate the capital gain since 2011?
B. Get, if possible, data of sale of comparable properties in 2011.
C. Is there any other method?
D. Do I need to hire and pay for a formal historical valuation?
Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

I had a case similar to this quite a few years ago and HMRC insisted on the inheritance date value being the cost, ie the probate value. They cited cases where the administration period of deceased estates took years to complete but the probate values stood for CGT purposes as far as the beneficiaries were concerned. I always thought this would be the case but the client wanted to use a valuation at the time he effectively took possession of the property.

In answer to your direct questions:

A You could use a valuation derived from an official index but I cannot tell you how HMRC would react. They can and do refer valuation cases to the District Valuer who has access to real prices paid for similar properties in the same area.

B This would the best method as it is what the District Valuer would use unless the property was very different to other properties in the area in which case it can get difficult.

C I'm not aware of any other credible methods other than professional valuations and actual sales records. 2011 is not that long ago and you may be able to find similar property sales without paying a professional valuer.

D If you can get a couple of formal valuations from a professional, then you have something to bargain with in a dispute with the District Valuer. The DV will look for professional valuations which have been made to "please the customer" so to speak.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15945
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and 2 other Tax Specialists are ready to help you
Expert:  TonyTax replied 2 years ago.
Thanks for accepting my answer.

I should say that The District Valuer normally only gets involved in UK property valuations and its more difficult for HMRC to look too closely into overseas property due to a lack of resources but they do have cooperation agreements with overseas tax jurisdictions and have access to information on the internet.
Expert:  russell-cssm replied 2 years ago.
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