Bluebond Estate Planning
Bluebond Inheritance Tax Planning
Bluebond Property Tax Planning

Avoiding Inheritance Tax on Your Home

Avoiding Inheritance Tax on Your Home

This is a difficult one to achieve but it is possible.

If you are willing to downsize in terms of value and gift away any money generated (preferably using a lifetime trust arrangement) that will work provided you live 7 years after the gift has been made.

However what happens if you love your home and prefer to remain in it long term? Most people do not wish to upset their own lives merely to save their children some tax.

The simplest method is to gift your home to your children. Simple, but fraught with danger and so best avoided. Should your children get divorced or become bankrupt you may lose your home as part of a legal settlement.

You could gift a proportion of your home.  Same problem as before but not quite as risky. However there are better methods. In addition you will have to pay rent at a commercial rate on the proportion given away to satisfy the HMRC that a gift has actually been made in reality. Capital gains tax will also be payable by your children on the gain in the proportion gifted to them. If you gift part of the house in your early 70’s the capital gains tax bill could be large.

You could choose to insure yourselves with a life policy but that is a very expensive method over the years of paying the premiums.

Depending on the value of the house and the value of the estate we suggest different methods of mitigating the tax.

Yes the methods involved can be quite complex but let’s face it you are trying to legally avoid tax. HMRC is not going to make it simple to do other wise everyone will do it. However for those of you with a large and valuable house the planning is not that difficult with an experienced financial planner. Errors in this planning can be huge.

Call us or email us for help. We are always happy to chat over any issues with potential clients.

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