Real estate and inheritance tax

Real estate and inheritance tax

Real estate and inheritance tax

In the modern era there has been a significant shift towards real estate ownership and with prices on the whole moving higher and higher in the longer term, many of us will be stung with inheritance tax and other tax penalties in years to come. This is an area of investment which is often overlooked by individuals who automatically assume they will not fall under the inheritance tax or general taxation banner. Oh how wrong they could be!

Whether you are looking to buy one property or a number of properties it is vital that you take professional financial advice. Many of us are more than willing to pour money into property with the idea of leaving our children something in their later years when we have passed. When you take into account investments, real estate and other assets, depending upon whereabouts in the world you live, the inheritance tax threshold may not be far away. In the UK the current threshold for inheritance tax is £325,000 with tax of 40% due on estates over this level.

Planning ahead

If you have one expensive property or are a number of average value real estate investments then you should look at your tax situation, both alive and when you have passed away, at a relatively early stage. There are many ways to mitigate tax on real estate investments such as joint ownership via a company and partnerships as well as trusts and other more complicated vehicles. It is imperative that you take professional financial advice as soon as possible to ensure that from day one your assets are as tax efficient as possible and as much money as possible will be paid to your family and as little as possible to the taxman.

Quote from : “Wherever you live in the world it seems that governments are more determined to take as much tax off us in life and in death and the subject of inheritance tax and property will become more prevalent. Do you have any inheritance tax planning in place with regards to your property and other assets?”

Stay away from controversial tax schemes

Over the last few days we have seen much media comment about an array of “tax efficient” schemes which have spectacularly unwound under closer scrutiny. The fact is that the vast majority of us have no issue paying tax which we are due but if you can make your investments more tax efficient then why not take advantage?

There is a big difference between tax evasion and tax avoidance and there are many perfectly legal ways in which you can split ownership of your assets, negate your potential tax bill and inheritance tax charge with no legal redress. In many ways it seems that the more tax you are looking to negate the more risky it becomes with regards to tax efficient schemes which can fall apart and be rejected by tax offices – sometimes years after your initial investment. This type of scenario has the potential to cause significant financial distress and many people have been known to flirt with bankruptcy.


While many of us automatically assume we will be well within the inheritance tax threshold the fact is that worldwide real estate prices have increased significantly in the long-term, the inheritance tax threshold has not moved ahead at the same pace and more and more people are now falling into this trap. Simple long-term tax planning can ensure that your assets are managed as efficiently as possible, both in life and in death, thereby leaving as much of your estate as possible for loved ones.

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