Example 1
Mr A disposed of his entire interest in his house to his daughter. He now lives there and pays her £100 per week as rent, without any formal lease or other agreement. Subject to possible exclusions and exemptions the disposal condition is met. The annual value of the house is £18,000, and the value (V) of the house at the valuation date is £475,000. FA 2004, Sch 15, para 4(2)(a) applies, and DV is equal to V.
The rental value is £18,000, and the appropriate rental value is:
The payments made by Mr A do not qualify for deduction as they are not made in pursuance of a legal obligation, therefore the chargeable amount is £18,000.
Example 2
Mrs B disposed of shares to her daughter, who sold them in for £80,000 and applied the proceeds towards buying a flat for £300,000. Mrs B now lives in the flat, and pays
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