My mum owned a buy-to-let property for over 20 years. At various points, 7 x 1/8th shares were transferred (via deed of transfer) to my dad. Each transfer was declared to HMRC on an annual tax return and the correct capital gains tax (CGT) liability for disposal calculated and paid, based on the market value at the point of transfer. The property has now been sold and the CGT liability for each party’s share needs to be determined. The question is: what is the correct base cost for the portions transferred to my dad? Is it the market value of each portion at the time of transfer, or because they were ‘gifts’ the base cost to my dad is it £0?

Arthur Weller replies:
Usually transfers from one spouse to another, who are living together, are 'no gain no loss' and no CGT is paid. Since you mention that CGT was paid when transfers were made from your mum to your dad, it seems to me that perhaps they were not living together. If I am correct, and assuming that these were gifts for no consideration, your father's base cost will be the market value of the asset being transferred at the date(s) of the transfer. So, your father will have to calculate seven different market values (dependent on the date(s) of the transfer) and add them together to determine the base cost of his 7/8 share of the property. See HMRC guidance in its Capital Gains manual at www.gov.uk/hmrc-internal-manuals/capital-gainsmanual/cg14530.