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Capital gains tax on transfer of land and property developments costs.
My clients Mr & Mrs T bought some land about ten years ago for £130 000. The land was split into two plots (£65 000 a plot). The couple’s two sons each built residential properties on the land and are now living in them. Each cost about £150 000 to build. Now they are valued at about £300 000.
Mr & Mrs T want to transfer the land to their sons. The capital gain for each property is therefore as follows: market value £300 000; costs of building; £150 000 (incurred by sons); cost of plot’ £65 000; and gain’ £85 000.
We believe that the costs incurred by the sons would be allowable under TCGA 1992 s 38(1)(b) which states: ‘The amount of any expenditure wholly and exclusively incurred on the asset by him or on his behalf for the purpose of enhancing the value of...
