Taxes Consolidation Act 1997 section 705L

Transfer of assets

Section 705L sets out the capital gains tax treatment of assets when a company or group elects to become a REIT or group REIT, and when assets are transferred between the property rental business and the residual business of a REIT.

• When a company or group becomes a REIT, all assets are deemed sold and reacquired at market value on the date specified in the REIT election notice, creating a CGT base cost reset.
• Where an asset moves from the property rental business to the residual business, it is deemed sold at market value on the date of transfer, and any resulting gain is a chargeable gain despite the normal REIT property income exemption.
• Where an asset moves from the residual business to the property rental business, it is similarly deemed sold at market value on the date of transfer.
• All deemed disposals and reacquisitions are treated as taking place at market value, ensuring that gains accrued up to each transfer point are crystallised for CGT purposes.