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Readers' forum : Gifting holiday cottage

17 May 2016
Issue: 4550 / Categories: Forum & Feedback

What rent is required to avoid a gift with reservation of benefit?

My client wishes to gift a holiday cottage to their daughter so there will be a disposal at market value for capital gains tax. The client stays at the cottage regularly and my understanding is that once gifted they will need to pay a market rent to their daughter to avoid a charge arising under the gift with reservation of benefit rules.

If they choose to retain 5% of the property will they still need to pay a market rent or will they need to pay 95% of the market rent?

I hope that readers can advise.

Query 18 779– Gifter.


Reply by Terry ‘Lacuna’ Jordan BKL Tax.

Gifter’s client proposes to gift a holiday cottage to his or her daughter and continue to use the property regularly. When inheritance tax replaced capital transfer tax on 

18 March 1986 the old estate duty concept...

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