How will the recent Autumn budget affect property landlords? Are buy-to-lets still good investments, or is it time to sell up?
These are decisions that may well face many homeowners currently inheritance tax planning in Cheshire.
The decision by the Chancellor of the Exchequer, Rachel Reeves, to draw pensions into inheritance tax from 2027 has prompted a few property owners to wonder if they might be better off cashing in on their assets and living off their pensions instead. Is this a good idea, and what would it mean for you?
Financial advisers have cautioned that landlords, including those with modest rental incomes, may need to formulate an alternative income strategy, because any sale is unlikely to generate that much. Someone who, for instance, is selling a house for £600,000 could in theory earn an annual income of £30,000 in savings accounts, paying out 4.5%. The interest, however, would be taxable, and you would in any case be unlikely to see that kind of money once capital gains tax, solicitors’ costs and estate agent fees are deducted.
On the other hand, it is worth bearing in mind that holding on to the property will incur inheritance tax liability if it is retained until death. Inheritance tax is now charged at 18% for basic rate taxpayers – a figure which increases to 24% for higher or additional rate taxpayers. Inheritance tax is payable at 40% over the nil-rate tax-free allowances on an estate.
Either way, it’s always a good idea to check with a financial adviser before coming to a decision.
