Minimising IHT on property based estates
Unfortunately, the government in recent years has sought to clamp down on more traditional ways of minimising Inheritance Tax (IHT) on estates which are comprised principally of property.
If you own more than one property outright, you may want to consider reducing the size of your estate through gifting or an increase in spending at this stage. However, this should be considered in light of the possibility of the need for nursing care for you and/or your spouse in the future.
Should you rent out at least one property and can spare the revenue originally received, you could perhaps gift that property to a beneficiary or place it into a trust to remove it from your estate.
If the income is still needed however, you might consider selling the property and investing the monies received from the sale into a discounted gift trust.
Bear in mind however, that Capital Gains Tax will still fall due on either the gifting or the sale of a property and that, should you choose to gift it, it will only be exempt from IHT if you live for at least another seven years.
Remortgaging your property to release funds for gifting is usually not recommended, as guidelines regarding this are extremely tight and more money could be lost than gained by following this course of action.
If you suspect that a considerable IHT bill will fall due on your main residence after your death, you may be advised to invest in a whole of life assurance policy, written in trust. In this way, you have provided funds to pay for the bill in advance, therefore protecting your beneficiaries from any undue financial burden and stress.