Many owners of buy-to-let properties may have overlooked the importance of protecting their property portfolio on death.
Despite what you may think, buy-to-let properties won’t automatically be inherited by your family on death. The lender is usually well within their rights to ask for the mortgage to be repaid in full, whether the loan was arranged in sole or joint names. Without access to sufficient funds to repay any mortgage,the property may have to be sold, with a resulting loss of rental income.
With Inheritance Tax (IHT) payable on estates over £325,000 (£650,000 for a couple) and normally payable at 40%, it’s easy to see how buy-to-let landlords could leave a substantial Inheritance Tax bill for their family to pay. HMRC require this bill to be settled within six months and have the power to force the sale of properties to settle this.
Taking out life insurance to protect your property portfolio is essential and we can advise you on the best type of policy for your individual circumstances, as well as how to put the policy in trust, so that it remains outside your estate for IHT purposes.
This material is for information purposes only and does not constitute a sales offer or financial advice. Before taking out any insurance or any other financial product, you must obtain individual advice regarding your requirements and general policy conditions. The presented information & data are valid at the time of publishing.
Source: Quilter Financial Planning – Essentially Mortgages Q4 2019