Bare trust for second home

Trusts Discussion
1

My client owns a second property which he purchased in 2012. His daughter has lived there since it was purchased & remains so. He now wants to put the property into a bare trust with himself & his wife as the trustees & his daughter as the sole beneficiary.

-What is the CGT liability?

-Is putting the house into a bare trust treated as a disposal of an asset for CGT purposes? If so, is the trustee or the beneficiary liable for the CGT?

-If the beneficiary is liable, when would they have to pay HMRC & is CGT holdover relief applicable here?

Many thanks in advance.

1 Like
2

The main question is why did he buy the property? If it was bought for the daughter, then perhaps it is a verbal trust. I would formalise a verbal trust under S53(1)(b) Law Of Property Act 1925. With that in place, he will not have to pay CGT and daughter will not be to pay stamp duty as there no monetary consideration. It all depends on the facts and evidence to support these facts. Happy to chat and see if we can help.

3
  • Market value - acquisition value - capital expenditure
  • Yes; neither. It’s the donor’s liability
  • See above
  • No, there is no holdover relief.