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Capital gains tax - trust query

House gifted by parents in 1993 lived in house until death. what is trust position.

Parents gave their children the family home and lived in it until they died.  The transfer by gift was made by solicitors. One child lived in the family home and was a carer for them.  The IHT situation is understood and is being dealt with.


I understand that one child living in the property will have the benefit of PPR, the remaining child could have Capital Gains Tax problems down the line as the house will not be sold and the unwritten instructions from the parents was that the second child protect  the other from any potential marriage/divorce problems with the house.  Is it fair to presume that the death of the final parent now means that the “trust” made by the gift in 1993 has now come to an end and that the gain arising in the period that the children owned the property may be exempt following TCGA 1992 S225.  If this is correct, presumably the IHT value on death as a Gift with Reservation will be the starting value for the non PPR child.  Presumably it would be best to complete an Income Tax Return showing this on the non PPR child?


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23rd Jan 2018 15:14

What trust?


Parents gave their children the family home...  The transfer by gift was made by solicitors.

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23rd Jan 2018 19:47

It is important to get your hands on the documents relating to the transfer from the parents to the children, (and perhaps any instructions given to the solicitor and advice provided by the solicitor to the client) to establish whether the gift was made subject to a continuing right for the parents to occupy the property during their lifetimes (or any other conditions). If it was then the transfer may well have created IIP trusts for the parents, but if the settlors were the donees and not the parents, and the IIP comes to an end on the death of the parents TCGA 1992 s73 may apply to give a no gain no loss disposal and therefore no gain for s225 to apply to at that date. Alternatively if the parents were the settlors then s72 may apply.

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to michaelblake
23rd Jan 2018 22:08

Everything in the OP indicates that there was no trust. Including the facts as stated, the IHT analysis provided and the reference to 'the "trust"'.

But I agree with you, as I have agreed when you have made the same point on previous occasions: the tax position depends on what has happened (hardly controversial!) and the OP is as likely to be wrong about the facts as s/he is about the tax.

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