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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Loss on sale of land: calculating the loss on a sale of joint property: general

Where only a share of land is included in an estate but the whole of the property is sold, the loss is worked out by

  • deducting the loss on sale from the value of the entirety (that is the gross value without any discount for joint ownership), and
  • then apportioning the result between the fractional shares, without any discount for joint ownership.

Example

A trust fund comprises Greenfields which is valued immediately before the death at £400,000.

A one quarter share only is comprised in the deceased’s estate and the date of death value (IHTM33100), allowing for a 10% discount for joint ownership, is £90,000.

Two years after the death the land is sold for £300,000 and the value of the entirety of the property after relief becomes £300,000.

The sale value (IHTM33073) of that part of the property comprised in the deceased’s estate is revised to £75,000 (that is £300,000 × a quarter).

You should refer to Technical any case where:

  • a share of land in the estate is sold to a person with an interest in another fractional share of that land, or
  • the sale of the entirety was not in fact made by the appropriate person (IHTM33050) (either alone or in conjunction with others) but by some other person, for example, trustees under another title.