Tax on trust property

Tax on trust property

Didn't find your answer?

In 2004 a client and his daughter (A) loaned a friend (B) £110,000 to buy a property which cost £120,000.Shortly afterwards A and B drew up a Declaration of Trust. it stated that B as trustee should hold the property for life. He lived there and was resposible for all running costs of the property. He spent about £40,000 on improvements.He paid no rent or interest to A. B also agreed that on his death to leave his share in the net proceeds of the property to A . His Will included this. The trust deed  further stated that B would hold the property upon trust to sell the same and stand possessed of the net proceeds of sale upon trust and for himself and A as tenants in common in the following shares - A 70% and B 30%. B has now died and A has taken full ownership of the property and wishes to sell it for about £220,000. .Does anyone have any thoughts on the tax implications for my client?

I think he has received 30% X £220,000 under the Will so free of tax. The 70% X £220,000 = £154,000 could be treated as a disposal with £110,000 as a deductible cost giving a gain of £44,000. However would it be my client or the trust that is taxable?

any comments would be appreciated.

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.