Meg Saksida looks at the ‘pros’ and ‘cons’ of tax planning in the context of trusts and rental property.
Unlike capital gains tax (CGT), there are virtually no exempt assets for inheritance tax (IHT) purposes.
For example, motor cars and the family home, both generally exempt for CGT purposes, will still be liable to IHT at the death of the taxpayer. Landlords may therefore find themselves considering ways in which they can reduce their death estate by the value of their rental properties to lower their IHT exposure.
Disposing of the property by sale is an option, but by selling the property, the landlord will instead simply replace the property with cash, which will remain chargeable to IHT in their estate. However, if the landlord gifts the property seven years post the transfer, the property will no longer form part of their estate, leading to an IHT saving of up to 40%. This is
