NZ Trust - Property Inheritance

[BigD289]

Hi

My Father recently passed away. He his a New Zealand resident and has a NZ property which he put in a family trust (some 20 years ago).

I am the beneficiary of the of the trust and am resident in the UK.

Are there any tax implications in selling the NZ property and bringing the money to the UK?

From what I gather there would be no inheritance tax but I think the trust may complicate this.

[maths]

I assume the trust is NZ not UK resident.

The odds are that any tax consequences are likely to be in NZ not the UK assuming the trust sells the property and then distributes the sale proceeds to you.

If the trust appoints the property out to you and you then sell you will potentially have a UK CGT charge (its quantum depending upon difference between sales value and value attributed to the property when it was appointed out to you).

[AGoodman]

I suspect there could be an additional risk depending on the terms of the trust.

If your father had a life interest in the trust, the value of the property would be uplifted to market value on his death (for UK tax purposes).

However, if it was a discretionary trust, or his life interest only started after 2006, there is a good chance that you could be on the hook for UK CGT when the trust makes a distribution to you.

Essentially, if the trustees sell, they make a capital gain but this is not taxed in the UK (assuming the trustees are not UK resident). The gain is equivalent to sale price minus the base cost. If your father did not have a pre-2006 life interest, the base cost would probably be the value when the property went into the trust.

However, if the trust then makes a distribution to you, those gains will be attributed to you and you will pay tax. If this happens in the tax year of the sale, you will pay 28% (on the attributed gain, not the whole distribution). If the tax was also paid in NZ, you could get a tax credit for that (it might cover the whole of the UK tax) but it doesn't look like NZ have capital gains tax.

I'd strongly advise getting some proper advice and providing the advisor with the full details including a copy of the trust.

There may be an "out" from this if you are UK resident but not UK domiciled or deemed domiciled. In that situation, you could elect to be taxed on the remittance basis but (a) there could be a substantial charge for this depending on how long you have been here and (b) it would only work so long as you kept the trust distribution monies outside the UK.

IHT would only be an issue if your father had a UK origin - it would then depend on whether he had become NZ domiciled by the time he set up the trust.

[BigD289]

Hi, thanks for all the tips.

Would anyone have any recommendations on someone who specialises in this to get some advice?

[BigD289]

I've done a bit of digging and the Trust was set up way before 2006. Does this make a significant difference?

[BigD289]

Apologies to resurrect this thread.

Does anybody have any recommendations for somebody who has experience in NZ trusts and inheritance?