New property transfer criteria

During 2009 taxpayers were given the opportunity to transfer their private residences that were held in a company or trust, into their own private names without incurring transfer duty or capital gains tax.

During 2010 the conditions for the transfer of those properties was widened; a condition was imposed that the company or trust must be terminated after the disposal in order to qualify for the relief.

The new rules provide that if a residence is held in a company or trust, the entity now has until 31st December 2012 to dispose of the residence, and provided certain criteria is met, no capital gains tax, STC or transfer duty will be payable.  The new relief measures came into effect on 1st October 2010 and apply to all residences disposed of on or after this date.

In order to qualify for the new relief, the following requirements must be met:

There must be a disposal of an “interest” in a “residence” by a company or trust

The disposal must occur on or after 1st October 2010 and before or on 31st December 2012.  Disposals that occurred during the period 11th February 2009 and 30th September 2010 could still qualify for the relief if the agreement of sale was subject to certain conditions that were only fulfilled on or after 1st October 2010

During the period 11th February 2009 to the date of disposal of the residence on or before 31st December 2012 the residence must have been used

 – mainly for domestic purposes by natural persons connected to the company or trust (shareholders of the company or beneficiaries of the trust)

 – these natural persons must have ordinarily resided at the residence

Within six months of the disposal or the residence the company or trust must take certain steps to terminate its existence

It is interesting to note that a “residence” is any structure, including a boat, caravan or mobile home that is used as a residence by a natural person, and includes any accessory or piece of equipment belonging to it.  Vacant land does not constitute a “residence” and will not qualify for the relief.