Question: What is the tax position on a repossession of a property?
Is capital gains tax due on a property that was repossessed by the bank after the owner died?
Arthur Weller replies:
Answer: If you look at HMRC’s Capital Gains manual (www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg12706) you can see that when a property is repossessed it is deemed as though the debtor sold it. If you look at CG30540 you can see that the personal representatives of the deceased are treated as having acquired the property at its market value on the day of death, and the capital gain is calculated accordingly.