Inheritance Tax and Investment Property

Investment Property is NOT Automatically Exempt from Inheritance Tax (IHT)

It is widely recognised that although most ongoing active businesses are exempt from Inheritance Tax (IHT) upon the death of the owner(s) or controlling shareholder(s), businesses where the main activity relates to investment property or properties are NOT exempt from potential IHT liability.

Can I do Anything to Reduce my Inheritance Tax Liability for my Investment Property? Answer – Yes.

However, all is not lost. If your investment property business already operates as a Limited Company, it is comparatively inexpensive and simple to remedy this problem. Even if you currently operate as a sole trader or partnership, although this would involve additional potential Capital Gains Tax (CGT) implications and greater expense, this might still be worthwhile. Especially if you have not owned investment property or properties until relatively recently.

Summary

Whatever your current situation, subject to a thorough cost and viability study before taking any official action, it is possible that you can remove a great deal of property value from your Inheritance taxable estate, for the benefit of your children or other beneficiaries, whilst maintaining your full control of such property together with your full rights to ongoing income from it.

If property or properties are currently held as a sole trader or within a partnership, then additional issues of potential CGT, Stamp Duty Land Charges and conveyancing costs would need to be considered before confirming if such an arrangement would be financially worthwhile, and subsequently taking any action.

For further guidance WITHOUT consultation fees nor obligation, please contact us.