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Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
Trust law and taxation is extremely complex, but I would suggst that as the property is being passed down the chain it would be for everyone's benefit for the Trust to make the transfer. The Gov UK guidance says:
'There’s no tax to pay in bare trusts if the assets are transferred to the beneficiary.'
Now if the Trustees sell the property that is a very different kettle of fish and any gain will be taxed under the CGT regime unless Private Residence Relief (PRR) applies ie when the property is the main residence of a person entitled to occupy under the rules of the trust. PRR relieves CGT at 100%. Otherwise a Trust is taxed at 28% on any gain less GBP 5.55K (half the entitlement of an individual entitled to Annual Exempt Amount (AEA)). It would thus appear that for the Trust to transfer the property and then wind up would be the better option tax wise
I do hope that you have found my reply of some assistance.
2. Well, I am not a Trust lawyer, but the trust appears to be a relatively simple bare trust. The right to occupy is not income, merely a licence for occupation.
3. PRR only applies to the period(s) when the premises are occupied by a person so entitled under the terms of the Trust. So long as PRR apoplies CGT is relieved at 100%.
4, Even HMRC accept that landed properties cannot be disposed of as quickly and easily as say a second hand car. For example PRR is extended for the last 18 months of an ownership irrespective of who actually is in residence so that sort of period would probably be acceptable to HMRC.
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