Holdover relief on Furnished holiday lets

Client has second home and wants to turn into FHL.

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Client has a second home worth £300k which she uses for family and personal holidays. She wants to reduce her future iht liability.her entire estate is worth £1.5m.

If she turns home into a FHL for tax purposes, and then transfers it into trust for her children or grandchildren to claim holdover relief, are there any restrictions on how long the property must be run as a FHL? As FHL rules apply looking at fisrt 12months would she just have to ensure the property is run as a FHL in a period covering one year? Or will she need to run it as a fhl for loneger?

Ignoring the tax, if she finds the fhl rules too onerous, she could just sell the property or gift it to her children or grandchildren and accept the cgt charge. Obviously she would have to make sure there is no gift with reservation of benefit and that she survives 7 years for there to be no iht charge.

Any other ideas to reduce the iht and or cgt? Turning it into her main residence is not viable. If it was worth above £325k then holdover relief would apply so she could wait and see if value increases? 


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