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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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i have one third of a property which is in a trust and i

Customer Question

hi i have one third of a property which is in a trust and i am a non resident. The other two thirds is own by 4 other persons. The property is up for sale, Do i have to pay CGT?
Thank you
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Are all five persons beneficiaries of the trust? What type of trust is it? When was it set up? Who set it up? Is it being wound up?
Customer: replied 2 years ago.

all five are beneficiaries i have 1/3 and the other 4 have 1/6, the trust will be set up next week by a law firm, i dont know what type of Trust it is

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Customer: replied 2 years ago.

the property is in the names of me my sister and brother, my sister and brother want to add their husband and wife on the property (for tax reasons. so the lawyer told them that we have to make a trust.I am a non resident i work and live in cyprus as it is i know that i dont have to pay CGT.My question is if have to pay CGT if the property is in a trust?

Expert:  TonyTax replied 2 years ago.

Hi again.

I'm a little confused by the fact that you said the property was up for sale in your question and in response to my info request you said that the trust will be set up next week.

Given that there are five people involved and only four names can be put on the land registry entry or deed, I think that the law firm may be drawing up a deed of trust whereby the four individuals named on the deeds hold the property on trust for those not named on the deeds. This is to protect their interests. If that is the case, if contracts to sell the property are exchanged by 5 April 2015, then as a non-UK resident, you would have no CGT to pay on your share of any gain. Non-UK resident owners of UK residential property which is sold after 5 April 2015 may have to pay CGT in the UK but only on the increase in value after 5 April 2015.

If the property is owned by a trust of which you are a beneficiary and not by the individuals directly and it is sold from within the trust, then it is the trust that will pay CGT, not you or the other part owners. You can read about CGT and trusts here.

You should try to find out what exactly what the law firm is doing as I'm not convinced that there is a trust in the normal sense of the word.

I hope this helps but let me know if you have any further questions.

PS I saw your last post after my answer was posted. What is happening is a common occurrence which is done to reduce CGT exposure. There is not a trust in the true sense of the word being set up as that would be inefficient tax wise. You should have no CGT to pay as your share's cost will be based on the 5 April 2015 value and you are selling next week. This is on the assumption that the property is a residential property. If it is not a residential property, then you shouldn't have CGT to pay in any event, given that you are non-UK resident.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15886
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thank you

Expert:  TonyTax replied 2 years ago.
Thanks for accepting my answer.

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