Discussion
Eric Mc said:
Contact a local surveyor or property valuer who will be able to assess what the market value of the property would have been at the time she acquired it.
This.Even with a certain amount of indexation available the base cost is going to be low after that time-frame.
What I would do is,
- Try to get a ball-park figure or approximate acquisition base value
- Index that to inflation through the permitted period, and
- Declare CGT payable on the result.
In my purely personal opinion the most cost-effective way through this will be to avoid paying professional advisers and submit something to HMRC that makes credible sense. If it costs a few ££ to get an original value estimate from a local agent that will be money well spent.
It may be very cost-ineffective to not employ a professional advisor if you don't know what you're doing. The chances of HMRC questioning values of property are almost NIL. Getting it glaringly wrong would raise those chances significantly.
If the property is residential then the gain needs to be reported within 60 days and the tax paid.
If the property is residential then the gain needs to be reported within 60 days and the tax paid.
And to submit the gain details and pay the tax within that 60 day time limit, the seller needs to register on-line with HMRC so they get their Gateway and access codes sorted.
Useful information here -
https://www.litrg.org.uk/tax-guides/capital-gains-...
Useful information here -
https://www.litrg.org.uk/tax-guides/capital-gains-...
Edited by Eric Mc on Tuesday 28th June 09:41
MaxFromage said:
It may be very cost-ineffective to not employ a professional advisor if you don't know what you're doing.
Three negatives in one sentence! For my own peace of mind I made an easy version 
'It may be very cost-effective to employ a professional advisor if you don't know what you're doing'.
To be honest, in my experience most people do mess up with CGT calcs.Panamax said:
This.
Even with a certain amount of indexation available the base cost is going to be low after that time-frame.
What I would do is,
In my purely personal opinion the most cost-effective way through this will be to avoid paying professional advisers and submit something to HMRC that makes credible sense. If it costs a few ££ to get an original value estimate from a local agent that will be money well spent.
Bold bit in English please, while we're all in the mood to translate financial jargon into everyday language. Even with a certain amount of indexation available the base cost is going to be low after that time-frame.
What I would do is,
- Try to get a ball-park figure or approximate acquisition base value
- Index that to inflation through the permitted period, and
- Declare CGT payable on the result.
In my purely personal opinion the most cost-effective way through this will be to avoid paying professional advisers and submit something to HMRC that makes credible sense. If it costs a few ££ to get an original value estimate from a local agent that will be money well spent.
Once upon a time, when calculating the gain that a property made between its date of purchase and the date of sale, you were allowed take into account the fact that some of this gain was due to inflation.
Originally, genuine inflation rates were allowed to be used in the calculation. These were based on the Retail Price Index at the date of purchase versus the Retail Price Index at the date of sale. This was known as "Indexation".
Indexation covers the inflation between March 1982 and 31 December 2002.
After 31 December 2002, a new system was brought in which did the same job but was cruder, called Taper Relief.
Taper Relief was abolished in April 2008.
Originally, genuine inflation rates were allowed to be used in the calculation. These were based on the Retail Price Index at the date of purchase versus the Retail Price Index at the date of sale. This was known as "Indexation".
Indexation covers the inflation between March 1982 and 31 December 2002.
After 31 December 2002, a new system was brought in which did the same job but was cruder, called Taper Relief.
Taper Relief was abolished in April 2008.
Precisely. However, when the inflation factor was removed from the CGT calculation, the rate of tax paid under CGT was reduced to compensate.
Before 2008, there WAS no specific CGT rate. An individual paid CGT at their top rate of Income Tax. So, many people paid the tax at a mix of 20% and 40%. When inflation adjustments were removed, for the first time, a special CGT rate of tax was introduced - 10%.
This was some compensation - but later the CGT on residential properties was increased to what it is now - 18% basic rate and 28% higher rate.
So, CGT is substantially worse than it was 15 years ago.
Before 2008, there WAS no specific CGT rate. An individual paid CGT at their top rate of Income Tax. So, many people paid the tax at a mix of 20% and 40%. When inflation adjustments were removed, for the first time, a special CGT rate of tax was introduced - 10%.
This was some compensation - but later the CGT on residential properties was increased to what it is now - 18% basic rate and 28% higher rate.
So, CGT is substantially worse than it was 15 years ago.
Eric Mc said:
Once upon a time, when calculating the gain that a property made between its date of purchase and the date of sale, you were allowed take into account the fact that some of this gain was due to inflation.
Originally, genuine inflation rates were allowed to be used in the calculation. These were based on the Retail Price Index at the date of purchase versus the Retail Price Index at the date of sale. This was known as "Indexation".
Indexation covers the inflation between March 1982 and 31 December 2002.
After 31 December 2002, a new system was brought in which did the same job but was cruder, called Taper Relief.
Taper Relief was abolished in April 2008.
To clarify currently if you gained a house on March1982 then you would have three separate gains calculations / or is it current rule presides from Mar1982 to Today?Originally, genuine inflation rates were allowed to be used in the calculation. These were based on the Retail Price Index at the date of purchase versus the Retail Price Index at the date of sale. This was known as "Indexation".
Indexation covers the inflation between March 1982 and 31 December 2002.
After 31 December 2002, a new system was brought in which did the same job but was cruder, called Taper Relief.
Taper Relief was abolished in April 2008.
Secondly if say you had a house from March 1972 to today do we take the bought price in Mar1972 and compare it against today or use the Mar1982 valuation?
Thirdly where do we obtain the Mar1982 valuation
Eric Mc said:
Once upon a time, when calculating the gain that a property made between its date of purchase and the date of sale, you were allowed take into account the fact that some of this gain was due to inflation.
Originally, genuine inflation rates were allowed to be used in the calculation. These were based on the Retail Price Index at the date of purchase versus the Retail Price Index at the date of sale. This was known as "Indexation".
Indexation covers the inflation between March 1982 and 31 December 2002.
After 31 December 2002, a new system was brought in which did the same job but was cruder, called Taper Relief.
Taper Relief was abolished in April 2008.
That's right, but I think people may be suggesting using some sort of index to estimate the value when the property was 'acquired' i.e. inherited?Originally, genuine inflation rates were allowed to be used in the calculation. These were based on the Retail Price Index at the date of purchase versus the Retail Price Index at the date of sale. This was known as "Indexation".
Indexation covers the inflation between March 1982 and 31 December 2002.
After 31 December 2002, a new system was brought in which did the same job but was cruder, called Taper Relief.
Taper Relief was abolished in April 2008.
Don't forget you can deduct costs of selling and some other costs from the sale price before working out the tax.
Then there is a CGT allowance that you don't pay tax on.
If there is a joint owner, you can use a two lots of allowance.
Presumably the place has been rented out?
Crudely the one-off costs which weren't offset against the taxable rent are mostly allowable against CGT.
Check the HMRC website, there are some exceptions IIRC, for things like houses you've kept your mad relatives installed in, maybe agricultural too?
CGT on rental property is going to bite a lot of people IMHO.
OutInTheShed said:
That's right, but I think people may be suggesting using some sort of index to estimate the value when the property was 'acquired' i.e. inherited?
Don't forget you can deduct costs of selling and some other costs from the sale price before working out the tax.
Then there is a CGT allowance that you don't pay tax on.
If there is a joint owner, you can use a two lots of allowance.
Presumably the place has been rented out?
Crudely the one-off costs which weren't offset against the taxable rent are mostly allowable against CGT.
Check the HMRC website, there are some exceptions IIRC, for things like houses you've kept your mad relatives installed in, maybe agricultural too?
CGT on rental property is going to bite a lot of people IMHO.
To hold receipts etc for works to the property from the 1960’s to today is a massive ask. Don't forget you can deduct costs of selling and some other costs from the sale price before working out the tax.
Then there is a CGT allowance that you don't pay tax on.
If there is a joint owner, you can use a two lots of allowance.
Presumably the place has been rented out?
Crudely the one-off costs which weren't offset against the taxable rent are mostly allowable against CGT.
Check the HMRC website, there are some exceptions IIRC, for things like houses you've kept your mad relatives installed in, maybe agricultural too?
CGT on rental property is going to bite a lot of people IMHO.
Welshbeef said:
To hold receipts etc for works to the property from the 1960’s to today is a massive ask.
It is.But you'd have to be talking about serious capital work to make much difference very long ago.
There might be capital jobs were were not allowable against rental income more recently.
AIUI, if you did a major improvement like say double glazing replacing single, that would not have been allowable as a maintenance cost, but could come off the top before working out CGT.
I found the bill my parents paid for a half-rebuilding a cottage in the 70s. It would not make much of a dent in the CGT bill for selling that place now.
But a lot of boxes of 'deeds' contain older and smaller receipts etc.
OutInTheShed said:
Welshbeef said:
To hold receipts etc for works to the property from the 1960’s to today is a massive ask.
It is.But you'd have to be talking about serious capital work to make much difference very long ago.
There might be capital jobs were were not allowable against rental income more recently.
AIUI, if you did a major improvement like say double glazing replacing single, that would not have been allowable as a maintenance cost, but could come off the top before working out CGT.
I found the bill my parents paid for a half-rebuilding a cottage in the 70s. It would not make much of a dent in the CGT bill for selling that place now.
But a lot of boxes of 'deeds' contain older and smaller receipts etc.
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