Inheritance tax

Inheritance tax

Didn't find your answer?

We have just picked up a new client who has around 15 properties which him and his wife are renting out. Total assets are well over £1m.

Apart from selling them with the potential capital gains tax issues is there any other way to mitigate them for inheritance tax.

If they were transferred to a company surely this would raise a CGT liability as well?

Only benefit being that money can be withdrawn as dividends to reduce personal tax liability.

Some have mortgages and no doubt they'd have to be changed and rates would be higher.

Any other suggestions?

Thanks!

Replies (5)

Please login or register to join the discussion.

avatar
By blok
29th Aug 2012 09:10

.

not really,

while the chasing of 15 lots of rent is undoubtably a business venture.  The holding of investment properties are specifically excluded from any IHT reliefs.

it could be possible to lose these properties within a large trading entity but that is very unlikley to be a practical option and can potentially create a bigger IHT problem than it solves.

the only obvious thing would be a transfer into trust, but that would have lifetime iht consequences and ongoing iht issues for the trust itself.

transfer into company would need to consider cgt and sdlt. 

you need to consider their health, family set up and long term plans..

 

 

Thanks (0)
avatar
By 0098087
29th Aug 2012 09:18

Thanks for that. Pretty much as I suspected. What about putting them into the kids name. I assume we then have a lifetime gain problem.

Thanks (0)
avatar
By malcolm141
29th Aug 2012 09:34

Phased transfers

Could you have a phased transfers or even phased disposals (to the kids) with the parents providing the mortgages (possible interest free)?

Have you made use the Nil Rate Band will be used on the first death?

What about paying for life insurance from the rent to cover the IHT?

Malcolm

Accountants North London

Thanks (0)
avatar
By 0098087
29th Aug 2012 09:40

With the phased transfers I assume we have the seven year rule. Life insurance is a good one we can look at. 

Thanks (0)
avatar
By malcolm141
29th Aug 2012 09:48

Seven year rule

Yes, you have the seven year rule but it allows you to use the CGT exemption and remember to reduce life cover as you reduce IHT.

Malcolm

Accountants North London

Thanks (0)