Bare property trust

14 January 2009

Issue: 4189 / Categories: Forum & Feedback , Property , Income Tax

Parents purchase a property with a mortgage and hold this on trust for minor children. Any profit is likely to be taxed as if it is their income, but if a loss arises, can this be set against their personal income from other properties?

What is the position where parents buy an investment property partly financed by a mortgage for their minor children using a bare trust and there is a rental loss after interest paid?

If there was a surplus this would be taxed on the parents while the children are minors but if the result is a loss can the parents claim this loss against the income arising from their own personal property portfolios? I am also wondering whether the new interpretation on chargeable events from 2007-08 changes this at all?

Readers’ advice is welcomed.

Query 17 332 – Almost There.

Reply by Lacuna

The ‘parental settlement’ provisions are now contained in ITTOIA 2005 Part 5 Ch 5. Prior to 9 March 1999 bare trusts for minor unmarried children of the settlor could be tax-efficient provided any income arising was not paid to or for the...

If you or your firm subscribes to Taxation.co.uk, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Subscribe Now...

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.

Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.