Sales of related property, etc: example of how to revalue property when both the loss on sale of land and sales of related property provisions apply
The deceased’s interest in land is valued along with other ‘related’ (IHTM09733) land owned by the deceased’s wife or civil partner (IHTM11032). The deceased’s interest in the land is valued at £40,000 (the ‘appropriate portion’ (IHTM09735)).Its separate value at death would have been £30,000. Within 3 years of death it is sold without the other land for £25,000. The sale is a qualifying sale for both sales of related property (IHTM09751) and loss on sale of land (IHTM33000) reliefs.
Step 1 – Revalue under loss on sale of land provisions
The value of the interest is adjusted under IHTA84/S195, which applies when an interest inland is valued with, and sold without, other land (IHTM33132).
|Actual sale price||£25,000|
|plus full value of death with related property||£40,000|
|less separate value||£30,000||£10,000|
|Total ‘sale value’||£35,000|
Step 2 – Revalue under sales of related property provisions
Although the sale is a ‘qualifying sale’ under these provisions, a further condition (IHTM09760) is imposed by IHTA84/S176 (4). In this case the sale price must be adjusted because there was a drop in value from the original separate value of £30,000 to the sale price of £25,000. As the original valuation – disregarding both loss on sale of land and sales of related property reliefs - was £40,000, the further condition was fulfilled.
The revaluation under IHTA84/S176 (2) is calculated as follows
|Property as revalued at step 1 using the basis of valuation with related property||£35,000|
|less the adjustment which resulted from using that basis of valuation||£10,000|
|Property as revalued under the loss on sale of land provisions on the basis of valuation without related property||£25,000|