Husband and Wife gifted 50% of an investment property to a discretionary trust, It is let to a third party. Husband and wife own the remaining 50% personally. In the 10YA charge for the trust can we still claim a 10% joint discount? I understand the discount is to reflect the challenges of selling a jointly owned property but given H&W are the only trustees of the settled share and the owners of the other 50% I am not sure whether a discount would be challenged, Appreciate any comments, Thank you
H and W are each settlors of the DT and under IHTA 1984 s 44(2) the trust property is treated as comprised in two separate settlements. Presumably, the property added by each of H and W occurred on the same day in which case the anniversary dates for each deemed settlement are the same.
The value of the property immediately before each anniversary in each settlement is based on market values [IHTA 1984 s 160].
Although IHTA 1984 s 161 would seem to be in point if either H’s or W’s 25% absolute beneficial interest was being valued it would not seem to impact wrt calculating any anniversary charges of the DT.
Hence, I would have thought that appropriate discounts should be applied.
Malcolm Finney
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I had this once in practice whereby a widow owned 50% of a let property (HMO) and the other half was owned by a discretionary trust of which she was the only trustee (but not settlor - that was her late husband). There was lengthy correspondence with the DV in connection with the 10yr anniversary value to be applied to the property - it was not in a good state of repair, but a discount for joint ownership was never queried, even though it was effectively the same person.
Maxine
TC Citroen Wells
Thanks Maxine; very helpful.
Malcolm Finney
Thanks so much both of you