Pensioners avoid inheritance tax by keeping mortgages

According to Lewis Hymanson Small, there is a growing trend among wealthy pensioners of deliberately maintaining a mortgage in order to avoid paying inheritance tax. A mortgage counts as debt and is therefore subtracted from the total amount of assets, which for some people can make the difference when it comes to inheritance tax liability.

This allows elderly home-owners to give money to children or grandchildren during their own lifetime, and then avoid the tax payment if they live for at least another seven years. Individuals have a transferable inheritance tax allowance of £325,000, so in the case of a husband and wife or civil partners, combined assets have to be worth more than £650,000 for inheritance tax to be payable.

Those wishing to maintain a mortgage over their property generally extend an existing one, or find a lender who will give them a mortgage based on their retirement income, though there can at times be difficulty finding banks who are keen to lend to pensioners.

If you require advice about inheritance tax or any other matter of tax planning contact Wilson Nesbitt solicitors in Belfast or Bangor by emailing . For information on remortgaging, including lifetime remortgages email .

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