Property valuation on transfer to a child

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Mamamia22

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A relative is signing over their house to their 50 year old son. The valuation has come in around 40k higher than expected. This will mean a higher stamp duty fee now. The solicitor had initially suggested requesting a lower valuation from the auctioneer as the house will be used by the parent until they die and that this affects its value today. But the son didn’t get around to discussing this with the auctioneer doing the valuation. Am I right in thinking that a higher valuation now might be better down the road as it might help reduce CGT when the property is eventually sold ?
 
I would ask another auctioneer to do a new evaluation with the price i.e minus the €40k..why go higher? house prices mayb go way down..
 
Indeed, make sure the auctioneer knows the full situation and isn't putting a higher value on it in the hopes of getting the job of selling it.
 
40K could be a significant change (price changes from 140k to 180k) or an insignificant change (price changes from 1,240k to 1,280k)
 
My question relates to CGT. If he as the new owner sells it in 10 years time after a gain of 100k is it nit better to accept the higher valuation now ?
 
Mamamia22 said:
My question relates to CGT. If he as the new owner sells it in 10 years time after a gain of 100k is it nit better to accept the higher valuation now ?
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Obviously a higher base/acquisition cost reduces the gain and thus the tax.
 
Mamamia22 said:
My question relates to CGT. If he as the new owner sells it in 10 years time after a gain of 100k is it nit better to accept the higher valuation now ?
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ClubMan said:
Obviously a higher base/acquisition cost reduces the gain and thus the tax.
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Only if it correctly reflects the current market value.

In the computation of a Capital Gain or Loss on the disposal of a property, if its original acquisition was between connected parties or otherwise not at arm’s length, there is an obligation to use its applicable market value at that date.

The valuation used for stamp duty purposes should ideally coincide with that but it sometimes doesn't.
 
T McGibney said:
Only if it correctly reflects the current market value.
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T McGibney said:
In the computation of a Capital Gain or Loss on the disposal of a property, if its original acquisition was between connected parties or otherwise not at arm’s length, there is an obligation to use its applicable market value at that date.
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The estimated fair market value in question has been determined by a valuer so I can't see how there would be any issue with it.
 
ClubMan said:
The estimated fair market value in question has been determined by a valuer so I can't see how there would be any issue with it.
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Other posters have indicated above how valuations may deviate from actual market values for various reasons, for example if the valuation inflates the stated value of a property because the owner is mindful that a hoped-for future CGT saving will outweigh a marginal additional Stamp Duty cost.

My observation stands.
 
Have they taken advice on this?

There seem to be life interests and remainder interests involved here, plus connected party issues.
 
They took a random local auctioneer and asked for a valuation. They are in no way connected. They did not deal with the auctioneer directly. It was through his secretary. The auctioneer based their estimate on the recent sale of a similiar 3 bed house in the town.
 
By remainder issues I assume you mean the parent who will live there until they pass on.
I’m not sure what connected party issues means ?
On reflection property prices have increased in this town. It’s within walking distance of a train station, overlooks a green and is in good condition, so perhaps it’s best to leave it.
 
Mamamia22 said:
They took a random local auctioneer and asked for a valuation. They are in no way connected. They did not deal with the auctioneer directly. It was through his secretary. The auctioneer based their estimate on the recent sale of a similiar 3 bed house in the town.
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The connected parties are your relative and their son.
 
Is the applicable market value not backed up by the auctioneers valuation and comparison to a recent similiar property the price of which was obtained from the price register.
 
T McGibney said:
In the computation of a Capital Gain or Loss on the disposal of a property, if its original acquisition was between connected parties or otherwise not at arm’s length, there is an obligation to use its applicable market value at that date.
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Where do you obtain the applicable market value for a property that was transferred between family members over 23 years ago? A property was transferred in a will in 1999 and is now for sale so how do you go about getting the accurate market value for that property in 1999 so you have a figure to base the gain on for CGT calculations?
 
housebound said:
Where do you obtain the applicable market value for a property that was transferred between family members over 23 years ago? A property was transferred in a will in 1999 and is now for sale so how do you go about getting the accurate market value for that property in 1999 so you have a figure to base the gain on for CGT calculations?
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An experienced professional valuer should be able to oblige, on the basis of data and local knowledge from back then.
 
Gordon Gekko said:
Have they taken advice on this?

There seem to be life interests and remainder interests involved here, plus connected party issues.
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This is an important point.

Does the relative have a right of residence in the property for life, and/ or a right to reside in the property to the 'exclusion of all others'? Note these can have different effects on the valuation of the property, or rather on the valuation of the interest. An actuary normally would value it, not an auctioneer or estate agent.
 
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