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Where Taxpayers and Advisers Meet

Reducing IHT through debt (Equity Release)

alive555
Posts:21
Joined:Mon Jun 29, 2015 1:23 pm
Reducing IHT through debt (Equity Release)

Postby alive555 » Wed Feb 22, 2017 6:33 am

Can someone answer this pls

1. If you take out an equity release mortgage on your main residence what is the benefit (can you use debt to reduce the value of your estate for IHT ?)
2. If you take out an equity release mortgage on your buy to let portfolio what is the benefit (can you use debt to reduce the value of your estate for IHT ?)
3. If you take out an equity release mortgage on either 1 or 2 above and invest in EIS shares what is the benefit (can you use debt to reduce the value of your estate for IHT ?)

Any other way to reduce IHT using debt instrument or even partial sale or gift to children ?

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Reducing IHT through debt (Equity Release)

Postby pawncob » Wed Feb 22, 2017 5:28 pm

You said
"After extensive digging around this wont work so im off to find a better adviser !"

I guess that didn't work out as you've still not found one that tells you what you want to hear.
With a pinch of salt take what I say, but don't exceed your RDA

AnthonyR
Posts:322
Joined:Wed Feb 08, 2017 2:33 pm

Re: Reducing IHT through debt (Equity Release)

Postby AnthonyR » Wed Feb 22, 2017 6:21 pm

Estate before (from your other thread):

House £1.4m
BTLs £1m
Total: £2.4m

After
1. House £1.4m
Debt say (£500k)
Cash say £500k
BTL £1m
Total: £2.4m

2. House £1.4m
BTL £1m
Debt say (£500k)
Cash say £500k
Total: £2.4m

3. House £1.4m
BTL £1m
Debt say (£500k)
EIS Shares £500k
Total: £2.4m
Debt set against EIS shares in priority, so no saving.

In 1/2 if the cash is gifted (direct or trust) and parents survive 7 years it's out of the estate. Bear in mind costs of equity release though.

With ~£800k of tax at stake it's worth paying for some advice rather than trying to DIY it. Expensive mistakes happen regularly in this field.
Anthony Rogers LLB CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk

alive555
Posts:21
Joined:Mon Jun 29, 2015 1:23 pm

Re: Reducing IHT through debt (Equity Release)

Postby alive555 » Thu Feb 23, 2017 8:36 am

I have paid for advise and they recommend selling flats and eis shares

one parent in hospital now age 83

no way to save money on this now

just have to sell the house for 1.2m and after iht get 200k, tax 800k-1m

not going back to uk now planning to move everything offshsore


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