Readers’ forum: Property gains

We act for the trustees of a landed estate and a question has arisen over the application of the ‘residential’ rate of capital gains tax to capital sums received from the variation of restrictive covenants over land previously sold for development.

The trustees sold some farmland for housing development many years ago and retained the neighbouring land being part of the main estate. The retained land includes not only farmland but several residential rental properties and the estate owner’s home.

The retained land and properties benefit from a restrictive covenant imposed over the land that was sold and this limits the amount of development that can take place on the land sold.

The farmland that was sold has since been developed as residential housing and sold off to a series of homeowners and property investors.

Recently some of the property owners have negotiated with the...