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PPR on trust after death of life tenant

Will the 18 month period of exemption apply following death of life tenant

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My understanding is that if a lifetime trust has been set up in which its only asset is a property and under the terms of the trust the beneficiary has a right to the income (to live there) then there will be no CGT due to the availability of PPR under section 225 TCGA 1992 if the life tenant occupies as his only/main residence. If that beneficiary dies with the result that the trust becomes a discretionary trust and the property remains vacant thereafter will the usual exemption for the final 18 months of ownership apply on any later sale of the property? Any help much appreciated.

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22nd May 2019 14:16

Your understanding is along the right lines and what you say may be true in the case in point, but, as a blanket statement, it is wrong. I don't say that as a criticism – take it as a prompt either to read the rules again, to take advice or to buy in some specialist assistance before giving advice, depending on your situation.

To your question: in my view, it depends. The answer is yes unless the property in question was subject to an inheritance tax charge (which may be Nil) on the beneficiary's death. In that case, there'd be no PRR because the period of ownership would be taken to begin on the death of beneficiary.

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