Part 13Tax avoidance
F1CHAPTER 5FIncome-based carried interest
Average holding period: aggregation of acquisitions and disposals
809FZNReal estate funds
1
Where a real estate fund has a major interest in any land—
a
any investment made for the purposes of the fund in that land after the time the major interest was acquired is to be regarded as having been made at that time, and
b
any disposal for the purposes of the fund of an investment in the land after that time is to be regarded as not being made until a relevant disposal is made.
2
In subsection (1)(b) “relevant disposal” means a disposal which (apart from subsection (1)) has the effect that the real estate fund has disposed of more than 50% of the greatest amount invested at any one time in the land for the purposes of the real estate fund.
3
Where a real estate fund has a major interest in any land (“the original land”) and subsequently acquires a major interest in any adjacent land—
a
the acquisition is an investment in the original land for the purposes of subsection (1)(a), and
b
after the acquisition, the adjacent land is to be regarded as part of the original land for the purposes of subsections (1) and (2).
4
In this Chapter, “real estate fund” means an investment scheme—
a
which is not a venture capital fund, significant equity stake fund or controlling equity stake fund, and
b
in relation to which the condition in subsection (5) is met.
5
The condition is that when the scheme starts to invest it is reasonable to suppose that over the investing life of the scheme—
a
more than 50% of the total value invested for the purposes of the scheme will be invested in land, and
b
more than 50% of the total value invested for the purposes of the scheme will be invested in investments which are held for 40 months or more.
6
In determining whether subsection (5)(b) is met in relation to an investment scheme, apply the rule in subsection (1) to the scheme.
Pt. 13 Ch. 5F inserted (with effect in accordance with s. 37(4) of the amending Act) by Finance Act 2016 (c. 24), s. 37(2)