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Tax considerations on the transfer of a holiday home to family members.
A client owns a holiday home worth £450 000. He is planning to sell the property to a discretionary trust for £119 000 to reduce his estate’s potential liability to inheritance tax. His adult children and grandchildren will be the only beneficiaries. This will be a chargeable lifetime transfer for inheritance tax of £331 000 but on the basis he has two annual exemptions available I believe this will not trigger a charge to inheritance tax. I understand that there will be a restriction on any claim to hold over any gain to capital gains tax on the disposal and I presume that any future claim to hold over will be similarly restricted.
Stamp duty land tax will be payable but only on the consideration (in this case £119 000). Although the additional rate will apply to avoid this the trustees can appoint a life interest in...
