Tax Valuation for Law Firm

Valuation of a substantial detached house in Milton Keynes for Capital Gains Tax (CGT) purposes

A London law firm provided instructions to provide RICS “Red Book” compliant market valuation advice to assist in the assessment of a potential Capital Gains Tax (CGT) related liability. Advice was  required, as at 2 valuation dates; namely 5^th April 2015 and current (taken as the date of inspection).

After inspecting the property, confirmation was sought from the beneficial owner as to any changes that may have taken place between 5^th April 2015 and the date of inspection. We were advised that some works of improvement had been undertaken and were provided with a copy of the specification of works, building programme and confirmation of the contract cost, including fees.

The subject property comprised a detached 6 bedroom house planned over three storeys with conservatory, rear garden (including summer house) and private driveway, having a gross internal floor area of 1,950qft, forming part of large private, residential housing development constructed in 2012, on the outskirts of central Milton Keynes. The interest being valued was freehold.

Due diligence was completed with general enquiries made in respect of planning and building control, council tax assessment, flood risk and EPC. Copies of the land registry title and plan were also procured.

Comparable sales evidence was collated around both valuation dates with the use of the firm’s online subscription portals and Land Registry records (to confirm completion dates) which was aided by telephone conversations with a range of local agents. The valuation report was then completed setting out the 2 values.

Our sales research showed that the local Milton Keynes market had experienced a modest increase in values between the two valuation dates. However, many of the local developments had been phased which had caused a slight over-supply and second hand properties were in competition with the new build sales market which attracted a premium and in some cases had been completed to a superior specification.

However, in the case of the subject property general enhancements and improvements had been carried out  between the valuation dates which included the creation of an additional bathroom, conversion of the garage and construction of a summer house / home office.

Based on the pricing movements between the valuation dates and improvements that were carried out, our valuations showed figures of £450,000 in April 2015 and £500,000 in the current market.