Capital Gains Tax question.

[Old Merc]

Old family friend owns an old property in the countryside,its been the family home for the last 40 years.Now that his wife has died,kids left,he wants to sell up,move to small place in town.Its been valued the best part of £1 million.

There is the house,2 old wooden barns,old wooden stable,sheds,paddock and part of a wood,total about 2.5 acres.He has been told there could be a CGT issue when sold.Something about your home and garden up to 1 acre is CGT free,any land over 1 acre is subject to CGT.
Can any of you tax experts please put us straight on this one.
Will he have to pay tax on the 1.5 acres? he probably paid silly money for it all in 1975 so the tax demand could be substantial. how could you value a paddock without a stable? a bit of a wood at the bottom of your garden can not be worth much?
How does all this work? what is the procedure?

[Eric Mc]

If he is selling the house and land, there is no need for a valuation. The "value" will be the sale proceeds.

[deckster]

Eric Mc said:

If he is selling the house and land, there is no need for a valuation. The "value" will be the sale proceeds.

Not that simple surely, as he's not selling the 'over the limit' bits separately.

As I understand it, anything under half a hectare is considered part of the property. Over that, and you need to convince HMRC that the land is in keeping with the property itself - at a guess, 2.5 acres might be considered excessive for a two bed bungalow but quite alright for an 8-bedroom mansion.

[Pothole]

https://www.gov.uk/tax-sell-property/work-out-your...

[Eric Mc]

deckster said:

Eric Mc said:

If he is selling the house and land, there is no need for a valuation. The "value" will be the sale proceeds.

Not that simple surely, as he's not selling the 'over the limit' bits separately.

As I understand it, anything under half a hectare is considered part of the property. Over that, and you need to convince HMRC that the land is in keeping with the property itself - at a guess, 2.5 acres might be considered excessive for a two bed bungalow but quite alright for an 8-bedroom mansion.

That's what estate agents and valuers are for. You engage a professional to work out the expected sale price of the entire property and in that calculation they will have factored in what part relates to the dwelling and its related land and what part relates to the extra land.
The ACTUAL sale price may be different to what the property was put on the market for initially, but the apportionment between the dwelling and the land would be fairly easily carried out by the agents/surveyors.

HMRC generally goes with these valuations but if they don't, they will appoint their own District Valuer for an independent opinion.