Bare trust property purchase

If the parents buy a property as bare trustees then the purchaser for SDLT is the daughter. Thus, for example, the grandparents may in their lifetime open an interest bearing bank account in the name of the grandchild and transfer cash into the account. What is a bare trust? Can a bare trust be reversed? How is bare trust taxed?

Are bare trusts tax deductible?

A simple trust , where the beneficiary(or beneficiaries) has an immediate and absolute right to both the capital and income of the trust. The property is held in the name of thetrustee(or trustees ), but the trustee has no discretion over the assets held in trust. The trustee of a bare trust is a mere nominee, in whose name the property is held. Beneficiaries of a bare trust have a right to all of the capital and income at any time provided they are over the age of 18. Any residential property purchased by the trustees will be treated as if the beneficiary had purchased it for SDLT purposes.

A child under cannot take legal title to property , so there are two ways in which the property can be held: a simple ‘bare trust ’ or a more formally constituted trust , such as a life interest or discretionary trust. Under a ‘bare trust ’, another person holds the title to the property as a nominee. In my situation the bare trusts I was setting up were for the benefit of my children and therefore both myself and the other executor of the will know about them.

If you’re a trustee buying on behalf of a bare trust , the beneficiary of the trust will be treated as the buyer.

The beneficiary will also be treated as the buyer if a trust holds property and the. Bare trusts Assets in a bare trust are held in the name of a trustee. An attractive aspect of bare trusts is their tax treatment. As the beneficiary has absolute entitlement to the assets in trust , and the legal title was given up by the settlor when they transferred the assets, there is no tax implication for the settlor.

For tax purposes, the assets are treated as the property of the beneficiary. In a discretionary trust , the trustee, the person who holds the trust property for the beneficiary, determines when the beneficiary will come to own the property of the trust. A bare trust is the opposite of a discretionary trust. Where there is more than one purchaser the surcharge applies to the whole purchase transaction if it would apply in the case of any one of the purchasers.

Here it is important to identify the type of trust in question, as different considerations apply. In effect, the trust is buying the property from the settlor. From a lender’s perspective, there is little difference between a trust buying a property, and a settlor placing a property in a trust.

The trust is the owner in either case, and if a mortgage is involve the trust is also the mortgage holder. This can make things difficult. There are two main types – bare or absolute trusts, and discretionary trusts.

A ‘ Bare ’ trust can be created where that the child is the beneficial owner, and the parents are the legal owners who hold the property effectively as nominees. Unfortunately, this type of trust is always subject to the percentage point stamp duty surcharge when used to purchase a property. The buy-to-let market has slowed a great deal since the. The duty of a bare trustee is to convey legal title to the beneficial owner upon request.

In the simplest form of a bare trust , the assets bequeathed by the individual who set up the bare trust are owned.

The income is the amount that the property earns while it is held in trust for the beneficiary. The capital is the amount of property in the trust. I own a buy -to-let property with mortgage in my sole name. I would like to write a declaration of bare trust to transfer the beneficial ownership to my wife to use her tax allowance, but I will remain the sole legal owner on the title.

A Bare Trust deed is an important legal document that ensures the proper arrangement is in place for the Super Fund to borrow funds for the acquisition of assets. No consent of the trustee is required for the beneficiary to acquire the trust property. There are different types of trusts and they are taxed differently.

For life interest or interest in possession trusts then the beneficiary with life interest or interest in possession will still be treated as the owner for SDLT purposes.