Inheritance tax reduction due to a mortgage?
I've just read that you can avoid/reduce IHT by taking a mortgage out on your property. Can someone please explain to me how this works. If you second mortgage your house then you either have the cash hanging around which would be taxable or you've bought something which would be part of your estate and also taxable?? Sensible answers only please. I'd like to understand this...
Public Comments
- If you take out a mortgage you'll have the cash. You then have give the cash away at least six years before you die, then it can't be taxed. When you die your estate is sold to pay back the mortgage and what remains, your equity, is taxable. Equity release is mehtod, which is a loan that is not secured against the property like a mortgage is, but the interest is higher as a result.
- no
