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Readers’ forum: Discretionary trust problem

03 December 2019
Issue: 4723 / Categories: Forum & Feedback
Property considerations with discretionary trust.

My client is the trustee of a discretionary trust that was set up by her mother. The trust property was a share in a flat that the mother lived in where she paid a full market rent to avoid the pre-owned assets tax and she met all the running expenses of the property herself. The mother has now died and the property has been put up for sale. I have three main questions.

  • Will the running expenses in the void period up to sale now being met by the trustees be deductible against the rent paid in the earlier part of the tax year by the mother?
  • Will the gain on the property be chargeable in the hands of the trustees because the mother did not occupy under the terms of the trust but by virtue of an arm’s length licence? ...

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