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Where Taxpayers and Advisers Meet

10 Year Periodic Charge on non cash assets in Trust

marc02
Posts:92
Joined:Wed Apr 22, 2009 2:46 pm
10 Year Periodic Charge on non cash assets in Trust

Postby marc02 » Tue May 04, 2021 12:11 pm

1) Where a Trust holds only real property, is a 10 year charge still due? Ie: Must the Trust liquify the asset (mortgage / sell the property or borrow funds) to make the tax payment?

2) Where the Trust is holding only shares in a private company that owns and lets residential property, must the "company" liquify the assets to make the periodic payment?

Thanks

AGoodman
Posts:1223
Joined:Fri May 16, 2014 3:47 pm

Re: 10 Year Periodic Charge on non cash assets in Trust

Postby AGoodman » Fri May 07, 2021 5:44 pm

1. Yes - the trustees need to raise the funds from somewhere - either sell an asset, arrange an addition to the trust fund or borrow. It should really have been considered when the trust was established as 10 year charges are nothing new.
2. The trustees have to raise the funds from somewhere, there is no rule regarding where that might be. Of course if they cause the company to liquidate an underlying property, there will likely be further tax consequences when they extract the cash from the company.


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