CGT, on property held in bare trust when one of the beneficiaries lives there

[koulaG]

Hi
Would anyone be able to help please? Our two children have a property in bare trust (inherited recently from their uncle). One of them, who is 16, is considering living at the property as the house is nearer his school and cuts down on a ridiculous commute. If we were to sell the property at some later stage, what would the CGT liability be, given that the property would be one of the beneficiaries' main property? His sister (who is the other beneficiary) is only 11 and lives at home with us. The bare trust is for equal shares of the house.

Thank you

[AGoodman]

If it genuinely became his residence then your son would potentially benefit from PPR when the property was sold. Your daughter would not.

However, you should not trifle with HMRC on the main residence exemption. Your son would need to move in properly and make it his home - he should register it as his home with the relevant authorities and potentially school - register for council tax (even if exempt) and any other organisations such as driving licence and electoral roll when the time comes.

The situation is out of the ordinary so its well worth taking some proper advice. You should also retain evidence as HMRC would be suspicious of whether a 16 year old was really in residence at a property rather than actually living at home.

I don't believe he needs to make an election as he presumably has no interest in the family home but I've never had to look at the point so it is worth checking.

[koulaG]

Thank you - this is really helpful.

[maths]

Completely agree with AG's comments.

My experience in practice is that it is an uphill struggle for a 16 year old to obtain PPR on a disposal.