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  • Tax

    You don't need to reinvent the wheel

    it is handy to have debts for IHT

    But you have to remember to have a back up for your successors of some life cover so they have funds to rearrange Mortgages on BTL property

    with the life cover been written in trust it falls outside your will so goes to the Beneficiary's  direct avoiding Probate  100%

    Its powerful if used correctly I am surprised the Govt have not stopped it


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    Learn Change and Adapt ?????

    The reason is because most can't afford the premiums 1 million wouldn't even cover my 5 property mortgages!!

    It is simply unaffordable for poor LL

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    Morning Paul 

    Understand your point

    But when you think about it in an every day family situation a married man of 25 could easily write a policy for a Million Pounds written in trust so whe he passes any time in his life

    his children would be millionaires of course inflation would eat away at it but its still tax free and will still be worth having in 40 years time if he were to die

    any life cover is better than no life cover I think

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    Learn Change and Adapt ?????

    I agree that if domestic circumstances would be severely compromised without life cover then most would try for life cover.

    But with stretched domestic budgets life cover premiums are simply unaffordable.

    Bear in mind that life cover has to provide at least £23000 of cover per year as that is what the state provides for free.

    Life cover to protect business assets is a different matter.

    It maybe considered that some of that business income is used to pay for expensive life insurance. That is a business choice to be made.

    I suppose it is sometimes not an affordability issue it is jam today, not in 40 years time.

    But for LL that do not want to see their business sold on death then it makes sense for the heirs that the life insurance premiums are paid to clear all outstanding mortgage debt.

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    Just curious, could you provide a source for that £23,000 a year?

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    They probably will stop it now that you've said that.

    They're probably lurkers here.

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    "of course inflation would eat away at it "   not if the policy is implemented as an index linked arrangement

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    It's all relative.

    For example, in the last week alone I have quoted £99.20 for £1m of cover to a 45 year old (peanuts when compared to the IHT bill + grief that's left behind) but also have quoted £800pm to another Client too.  This last Client was prepared to 'invest' £1,000pm so he is even more happy than the other guy!

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    Life cover, another one to go on the list to look into....

    As to the amount of debt permitted, it would most likely be not greater than the initial purchase price paid + the cost of any capital improvements carried out.

    There will be an amount of debt, and the collective value of the all properties,  which is likely to be greater than the debt, as its likely the properties would have risen in price since they were first purchased.  So whilst debt can be used, there will still be an amount exposed to tax. 

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    instead of paying premiums, presumably the same can be achieved probably more cost effectively gifting children money (for iht/ remortgaging) assuming the person making the gift lives for 7 years?

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