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  • Tax

    Succession

    Hi

    I am now 60 and about to retire, I have 5 properties as does my partner (not married). Looking at ways to reduce taxes when we pass the properties on to our children.

    Anyone done anything similar and had any success?

    Thanks in advance
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    Not a lot to go on. There are various strategies but this is what I’d do.

    I’d get married. I’d get as big a mortgage as possible on each house to reduce inheritance tax liability. Gift some of this money then live for 7 years. Avoid capital gains tax by one of you dying then passing all your wealth onto the surviving partner. Any capital gains tax liability will then be rebased from the date one of you died. Capital gains liability will then only accrue from the date the first of you died. Hope that IHT is abolished before you’re both dead.

    Sorted.
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    Big issue with that plan is then being highly leveraged with all the s24 changes... will have to do some calculations
    Thanks for the thought though
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    IHT is 40%.  Don’t let the tax tail wag the dog. The main way to mitigate s24 is to put into a limited company but that can easily not be cost effective. 

    There is always a trade off with CGT and IHT. My plan gets rid of most of the IHT and all of the CGT. A bit of extra income tax is a small price to pay. Bear in mind Boris is going to raise the higher rate threshold to £80,000 so even less income tax to pay.
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    In my example this is the case. I don't understand your point.

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    If you don’t want to get married or enter into a civil partnership which helps finances in several ways then just sell all your rentals and pay the CGT after all you will still keep 72% or 82% of the gains depending on whether you are a basic or top rate taxpayer which is a positive way of looking at it . Then give the money away to your kids and as long as you live 7 years you don’t have to worry about IHT but remember your kids wives/ husbands could be walking awaywith half that money when they get divorced . 
         Another advantage of giving it away when you are young fit and healthy is the local council won’t be stealing it from you to pay for your nursing home fees many years later .
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    well, just put all your properties into a limited company, then open a separate limited company under your children's name, deciding how much holding each child will have 

    and then sell the company to them, for less than the value of what its worth and pay the different in tax.

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    Also bear in mind that you could live to be eg 96.

    What s your provision?

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    I am looking at this currently and it appears that whatever you do you get caught by some tax

    *reduce mort liability which helps S24 tax (day to day cashflow)

    *sell btls and pay cgt

    *have assets and at death iht kicks in

    I looked at taking out an insurance policy put in trust so at death my iht would be paid but this is expensive as I am coming up to 60.   Still not sure which way to go yet and am prob going to wait to see what happens with iht

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    Jane

    Enterprise Investment Scheme can help you with CGT and IHT if you sold all your BTLs.

    They are high risk but offer tax mitigation and high growth potential but only potential and not guarantee of returns. 

    Worth a look.

    Tom
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