Can anyone comment on the following. The parents of a family gift their main residence to their four children, with all the boxes ticked for a formal transfer. The children form a LLP and adapt the residence as a small Rest Home for 6 people. If the parents then become paying tenants as part of the resdidence of the Rest Home and survive for at least 7 years, will any CGT become due ? Your input would be appreciated, Regards Snoopy
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CGT
Are you in fact asking about IHT, as I can't see that there would be any CGT payable by the parents on the disposal of the PPR?
No CGT, as noted above. It is, however, I think, a GWRB, and so remains in the parents' estate for IHT purposes.
If it's not a GWRB (and I'm pretty sure it is, but haven't checked the detail of the legislation/HMRC guidance) it will be subject to POAT, and there will be an annual income tax charge on a deemed market value "rent". The POAT can be avoided by electing to treat it as a GWRB.
Abbreviations
GWRB = Gift with reservation of benefit and POAT = Pre-owned assets tax.
As noted in my earlier responses, a GWRB is a PET but remains in the death estate (and can give rise to a further PET if and when the reserved benefit ceases) and a POAT charge (market value "rent" in this situation) arises where a donor continues to enjoy use of an asset (or a substitute asset) after a gift. They are either/or options though.