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bigduckontax
bigduckontax, Accountant
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I own a property that I've owned years. I lived there

Customer Question

I own a property that I've owned for 14 years. I lived there up until 3 1/2 years ago. I want to sell the property to a relative of mine for a good price. I won't be having the property professionally valued but there it's on an estate where the is a lot of similar houses and a fair turn over of stock so we have a good idea of what the value is.My question is I don't want to have any problem with HMRC saying that I'm avoiding CGT on the property by selling it at a low price to a relative. There is actually very little as in one or two thousand pounds of CGT to pay because I lived at the property for so long. I have read on the HMRC site that they give notional values to assets that you sell to catch people selling things cheaply and to me with property there will always be a range of possible values that they could apply. How can I find out the range of values HMRC would accept for this property to be sold at or in fact if they do have a definitive value which they calculate how do I find that out.Clearly I don't want to cause a problem for myself with HMRC but at the same time I want to sell the property to my relative for a good price.
Submitted: 9 months ago.
Category: Tax
Expert:  bigduckontax replied 9 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. If there is any dispute as to the market value of your property the matter will be resolved by the Valuation Office Agency (VOA), part of HMRC staffed by Chartered Surveyors. VOA's main function is assessing bandings for Council Tax or ditto for business rates, but they are also advised of all transactions in landed property and thus have an excellent database of values. You say that you did not live in the house for some 42 months. Was it let out during that period. Once I know this I can advise you further.
Customer: replied 9 months ago.
No I let another of my relative live there for free.
Expert:  bigduckontax replied 9 months ago.
For the last 18 months of ownership you are deemed to be in occupation even if this is not the case so for 24 months you were not in occupation as the premises were let at a peppercorn rental. Total ownership period is 168 months so 24 / 168 [14%] of any gain made on disposal will be taxed at 18% or 28$ or a combination of the two rates depending on your income including the gain in the tax year of sale. From this proportion you can deduct 11.1K (Annual Exempt Amount (AEA) to reveal the gain exposed to Capital Gains Tax (CGT). ,The gain is the difference between the net selling price ie after deducting sales costs and the acquisition price. The latter is the purchase price plus the purchase costs including stamp duty land tax plus any improvements eg installation of double glazing, central heating, extensions, but not routine maintenance. All in all your exposure to CGT is likely to be small. I do hope my reply has been of assistance.

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