I self-built a bungalow in my back garden which I am now selling for below market value to my son. The bungalow cost overall £180,000, is now valued at £420,000, and I am selling the whole to my son for £70,000. I'm sure capital gains tax (CGT) will be incurred. If so, can I offset one-sixth of the costs against the £70,000 gain? Or is the gift also subject to CGT? 

Arthur Weller replies:  

When you gift an asset to anyone, and when you transfer an asset to a connected person (e.g., a son), for CGT purposes it is deemed to go across at present market value. The amount actually paid is ignored. So, since it is currently worth £420,000, and it cost you £180,000, you are making a capital gain of £240,000. However, check whether the value of the land underneath the bungalow is included in the £180,000 or not.