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PRR for an estate

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I am acting for the current trustees of a will.  

Under the terms of the will the deceased has left a life interest in a house which was occupied by the beneficiary on the basis that he would not be charged any rent and he would be allowed to reside in the house provided he paid all the outgoings in respect of the house and observed and performed all the covenants and conditions set out in the deeds under which the property was held. He was also obliged to keep it in good repair and keep it insured comprehensively in the joint names of himself and the trustees. Following the beneficiary's death in 2018 the property was to become an accretion to the residuary estate which otherwise had been disposed of shortly after the deceased’s death in 2009.  Probate was granted in February 2010. The property has now been sold in February 2019 for £227,500. I do not know what the probate value of the property was in 2009 but I would imagine there must be some uplift in the value between those dates and it occurred to me there might be some Capital Gains Tax liability for the uplift. I understand that the beneficiary was occupying the property as his main residence so it occurs to me that as a life tenant the occupation would mean that there is no Capital Gains Tax liability in the hands of the trustees because of private residence relief upto the date of the beneficiary's death and the period upto sale of the property (8 months) is covered by the additional 18 months, am I correct in this assumption?

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By DJKL
25th Mar 2019 16:54

I suspect no CGT as the ife interest is within scope of IHT re the estate of the liferenter now deceased so in effect, for the trustees, it is deemed disposed and acquired on date of his death.

https://www.gov.uk/government/publications/trusts-and-capital-gains-tax-...

"If a life tenant or other person with a qualifying interest in possession dies and the property continues to be settled property or a beneficiary becomes absolutely entitled to the property, the trustees are deemed to have disposed of it and reacquired it at market value. There is no gain or loss unless the trustees acquired the asset subject to a hold-over claim, read Helpsheet 295 Relief for gifts and similar transactions. The trustees’ chargeable gain is the lower of the held-over gain and the actual chargeable gain or, when on the death of the life tenant the property reverts to the settlor, the trustees are treated as disposing of the property at a consideration that gives rise to neither a gain nor a loss."

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