Ken spent thirty years building a portfolio of eight houses. He ran it like a business, did the repairs himself and knew every tenant by name. He assumed it would pass to his children like a business would.
What happened
When Ken died, his children learned that rental property doesn't usually qualify for business relief. The portfolio, his home and his savings were taxed at 40% above the allowances.
The fallout
- An inheritance tax bill of several hundred thousand pounds.
- Three houses sold quickly to pay it, with tenants given notice.
- Capital gains and buying costs to come if the children ever want to rebuild the portfolio.
What could have been different
With planning in Ken's sixties, the family could have looked at ownership, gifting and how the portfolio would pass on. Most of those options take years to work, so the time to start is well before they're needed.
What could your family face? Try the landlord inheritance tax calculator or speak to a specialist.
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