»Ê¹ÚÌåÓýapp

Company leaves one group and joins a Group REIT

T and Z are members of group V. Z transferred a property to T on 30 June 2015 at a no gain/no loss value of 1,500. »Ê¹ÚÌåÓýapp market value at that date was 2,000.  An existing Group REIT acquires T on 31 May 2017, when the market value of the property is 2,300.  All companies have 31 December accounting dates. 

»Ê¹ÚÌåÓýapp sale of T by V triggers a deemed disposal and acquisition of the property by T at its market value on 30 June 2015 (TCGA1992/S179(3)). »Ê¹ÚÌåÓýapp gain (before indexation) of 500 is treated as increasing the consideration received by V (TCGA1992/S179(3A).

When T joins the Group REIT, there is another deemed sale and reacquisition of the property, at market value 2,300 (CTA2010/S536(2) and (3)). »Ê¹ÚÌåÓýapp gain of 300 between the TCGA1992/S179(3) deemed sale and reacquisition and the S536(2) one, is not a chargeable gain (CTA2010/S536(4)).          

Company leaves a Group REIT

T and A are members of Group REIT G.  A transferred a property to T on 30 June 2016 at a no gain/no loss value of 1,500 (original cost plus enhancement and indexation relief).  »Ê¹ÚÌåÓýapp market value was 1,800 at the date of entry to the REIT regime and 2,000 at the date of the intra group transfer.  A company (which is not a UK-REIT) acquires T on 31 May 2017, when the market value of the property is 2,300.  All companies have 31 December accounting dates. 

»Ê¹ÚÌåÓýapp sale of T by G triggers a deemed disposal and acquisition of the property by T at its market value on 30 June 2016 (TCGA1992/S179(3)). »Ê¹ÚÌåÓýapp gain (before indexation) of 500 is treated as accruing to T on 1 January 2017 (S179(4), being later than the date of the TCGA1992/S179(3) deemed sale and reacquisition). This gain accrues to T in the accounting period that runs from 1 January to 31 May 2017 (the old one ceases and a new one begins when the UK-REIT regime ceases to apply to T). This gain accrues while T is within the REIT regime, and is therefore not a chargeable gain, under CTA2010/S535. 

When T leaves the Group REIT G, there is another deemed sale and reacquisition of the property, at market value 2,300 (CTA2010/S579(4) and (5)). »Ê¹ÚÌåÓýapp gain of 300 between the S179(3) deemed sale and reacquisition and the S579(4) one, is also not a chargeable gain under CTA2010/S535. 

»Ê¹ÚÌåÓýapp base cost of the property to T for future disposals is as follows:-

2,300 if the property is retained for more than 2 years after T leaves the REIT regime and there are no  deferred gains waiting to resurface or

 2,000 if the company leaves the REIT group within 10 years and sells the property within 2 years - see IFM25055 and IFM26035 onwards for the consequences of leaving the REIT regime within 10 years