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Selling your PPR

.... when a trust owns it

A client telephoned me today to let me know that he was flitting and casually threw into the conversation that he was having a bit of trouble at the bank because his existing home was owned by a trust.  Apparently, the house is the only asset the trust owns.

Would I be correct in saying that, prima facie, my client and Mrs Client have abandoned their PPR relief for CGT purposes ?

Obviously, I've asked for more information, such as the trust deed and what he was thinking of at the time.

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18th Jan 2018 19:40

lionofludesch wrote:

... what he was thinking of at the time.

Made me giggle, thanks.

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18th Jan 2018 21:25

I guess it could be care home fee avoidance or similar.

I suppose his ppr relief has gone, but the trust may be able to claim its own ppr relief, if its occupied by a beneficiary as their ppr under the terms of the trust. Or something to that effect.

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19th Jan 2018 11:47

The house belongs to the trust, it must therefore be sold by the trustees and the proceeds paid to the trust. Hopefully, the trust has a bank account as the solicitor may be reluctant to pay the proceeds to someone else.

The trustees may be able to claim PPR for the period that your client occupied/deemed occupied it under the terms of the trust.

Also check out when/how the property got into the trust and whether a holdover election featured as this could prevent a PPR claim.

The trustees will then have to decide what they do with the proceeds. This will be determined by the trust deed and may not include giving all the proceeds to your client!

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19th Jan 2018 15:24

It is essential to get your hands on the documents that the client believes created what he believes to be a "trust" since some trusts (e.g. bare trusts) are transparent for CGT purposes but others (settlements) are not. Once you know what type of trust you are dealing with you can then start thinking about the CGT consequences that might arise from any sale of the property by whoever is the beneficial owner of the property. The guidance at https://www.gov.uk/trusts-taxes/trusts-and-capital-gains-tax is a starting point if the property was settled on trusts.

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