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Capital gains tax computation on sale to a connected person.
A owns a property whose present market value is £50 000. A says to B: ‘I am granting you a legally enforceable option that any time that you wish you can purchase the property from me for £50 000.’ Some years later when the property is worth £200 000 A sells it to B for £50 000. A argues that the sales proceeds figure to be used in his capital gains tax computation is £50 000 not £200 000. Is he correct? Further does it make a difference whether A and B are connected (TCGA 1992 s 17 and s 18)?
I am particularly interested in a specific scenario. A man wants to buy a property but cannot afford it. His father has the cash or at least has a better credit rating than the child. The father buys the property now...
