Sale of property in trust - any CGT exemptions?

Is there any way of reducing the CGT due on the sale of the property?

Didn't find your answer?

I usually only advise on basic CGT issues such as sale of shares etc or a buy to let property never anything to do with trusts and so my first question would be - should I point the client to a specialist (a solicitor maybe I'm not sure who would be best to answer this??).

A house was put in trust when a clients father died in 2000. In it he allowed his disabled brother to live there as long as he wanted but recently he died and my client has the job of selling the property as he is the only executor left.

There are three siblings left to share the value of the estate once sold. Could there be any exemptions as the trust allowed a disable person to live there ?

Many thanks

Chicka

Replies (13)

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By Tax Dragon
05th Nov 2019 09:57

Your client wears two hats - one as your client, one as trustee. I would counsel you against advising him as trustee just because he also identifies as your client. It's a separate client and a separate engagement.

It should probably be a separate accountant too. The trustees would do well to appoint an accountant (or TEP) versed in trusts and trust taxation.

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Replying to Tax Dragon:
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By The Dullard
05th Nov 2019 10:53

And, you never know, such a person might come to the view that there is no gain.

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Replying to The Dullard:
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By Tax Dragon
05th Nov 2019 11:31

That thought had not escaped me(*). But there may well be more to advise on than the CGT. Trustees have responsibilities. Appointing someone who knows what they are talking about would help in the discharge of those responsibilities.

As you know, trusts have accounts and tax principles that are far removed from those most accountants might encounter day-to-day - some of the more honest non-trust Aweb members, speaking from experience, have advised others to steer well clear of these weird nonentities.

(*) And wouldn't the trustees have done well if they appointed someone that could confirm this?

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paddle steamer
By DJKL
05th Nov 2019 11:32

Look up IIP Trusts- also Brother's Estate IHT position may need checked re same

Professional help is very advisable.

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By MJShone
05th Nov 2019 12:46

I agree that you should get someone who knows about trusts involved.

However, to answer the question you asked, look at s225 TCGA 1992. I'd like to see the deed but it sounds to me as if the disabled brother occupied the house under the terms of a trust. Therefore, if it was his only or main residence, the trustees should get main residence relief.

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Replying to MJShone:
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By Tax Dragon
05th Nov 2019 13:01

But I would counsel the OP not to say that to the client, because it ain't necessarily so (as you say, absent the trust document, we're all guessing a bit) and for his own sake the trustee needs to get the right answer.

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By MJShone
05th Nov 2019 12:47

Duplicated

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By chicka
05th Nov 2019 13:18

Thank you so much for all the replies.

Clearly this is something that I am not able to answer and so he needs to seek advice elsewhere - by any chance would anyone here know of anyone I could pass him to for help on this matter who are located in Lancashire (long shot I know!).

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By SteveHa
05th Nov 2019 13:28

Who was the ultimate beneficiary of the trust? If the brother he should qualify for private residence relief.

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By The Dullard
05th Nov 2019 13:49

So, you're sure from the facts given that there's a gain to apply that relief to?

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Replying to SteveHa:
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By Tax Dragon
05th Nov 2019 14:08

Read the question.

You shouldn't let your knowledge of s43 IHTA cloud your understanding.

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Replying to Tax Dragon:
By SteveHa
05th Nov 2019 16:00

I missed the last sentence, which renders my reply pointless.

Oh, and not IHTA; TCGA provides private residence exemption in respect of a trust property occupied by the beneficiary.

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Replying to SteveHa:
paddle steamer
By DJKL
05th Nov 2019 15:19

If an IIP does the trust asset value not uplift (for CGT purposes) upon death of the brother and the issue is then the asset valuation in the brother's estate for IHT purposes of his interest in the trust at the date of his death and the liability (if any) arising within the trust (if there is one) for any such IHT liability re said trust interest.

Certainly my understanding of IIP as I dealt with a calculation for one where I was a trustee a year or so back, though not an area I ever offered to clients in practice

http://www.tolleytaxtutor.co.uk/taxtutor/files/subscriber/personal-tax/u...

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