Using BTL re-mortgage to reduce IHT?

marcusjames

Not sure which forum this belongs.


An elderly family friend has a portfolio of properties currently let out. He does not have a wife or children.

We were chatting about his options to release some cash to enjoy his remaining years. He mentioned that he could sell one property (he's not that reliant on the income from all properties) and travel, purchase new car etc. He inherited the portfolio many years ago and CGT would be fairly significant.

It occured to me that he may be able to take out a BTL mortgage (he's 74) and spend that. In theory, he would then avoid the CGT. IHT would be relatively similar in both scenarios if he goes out and spends the money. The estate would obviously clear the mortgage as part of probate.

Assuming he can get a mortgage, is there anything wrong with my thought process?

kidmugsy

marcusjames wrote: »

is there anything wrong with my thought process?

Seems a good idea to me. He'd also save some income tax by virtue of paying interest on the mortgage loan, so that the loan would be cheaper than the headline figure.




Or: consider selling his own house and moving into one of the let houses. Perhaps more fuss than he would welcome.

00ec25

marcusjames wrote: »

Assuming he can get a mortgage, is there anything wrong with my thought process?

yes, the first part of your sentence.

BTL mortgages beyond 75 are rare. Beyond 80 are non existent

he can spend all the money and then have to sell anyway in order to repay the mortgage 1 - 6 years later (or he can die in the next 6 years and avoid repaying himself)