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Where Taxpayers and Advisers Meet

IHT planning on BTL property

Cloisters
Posts:47
Joined:Fri Oct 14, 2016 5:37 pm
IHT planning on BTL property

Postby Cloisters » Fri Apr 01, 2022 12:18 pm

My wife and I own a BTL property the value of which is all in excess of the IHT threshold covered by our other assets.

Currently the property is valued at approximately £450,000 with a £200,000 mortgage on it.

We paid £155,000 for it in 2000 so a significant CGT liability on sale.

We could find a way in future to repay the mortgage if that helps as I am aware having a mortgage can complicate some tax aspects.
We would hope at some point to gift the value of this property to our adult children in the longer term.

What is the best way to plan our tax liabilities so our children get the most benefit please

Some ideas being:
- put the property in trust (I believe we would need to pay the mortgage down first to avoid SDLT at least on the transfer), Could we still receive the rental income?
- gift it in fractional shares between the children of our CGT allowance each year over a number of years, presumably splitting the rental income progressively
- on first death no CGT so surviving spouse could gift that part to the children and preserve the full posthumous IHT allowance if they survived seven years.

All thoughts welcome please, this feels like it must be quite a normal problem for many so hopefully some solutions out there.

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