Question:
I have a second property and I wish to transfer this property to my three grandchildren under the trust regime. Do I have to pay capital gains tax and is it free of inheritance tax after 7 years?
Arthur Weller replies:
Assuming this is a 'mainstream IHT trust', putting a property into it is subject to CGT. However a gift holdover relief claim can generally be made to defer the capital gains tax. The gift is subject to lifetime inheritance tax at 20% (it is not a potentially exempt transfer (PET)), but only the amount that exceeds the inheritance tax nil rate band (£325,000).
