Shelter’s Income and expenditure figures highlighted13:57 PM, 4th February 2019
About 2 weeks ago 35
My wife and I own several properties which are rented to tenants. Some of the properties were bought over a number years by increasing the mortgage on our principal residence, each advance being identifiable as an advance with which to purchase a buy to let property, leaving each BTL unencumbered.
We did this as the mortgage interest on our principal residence was more attractive than taking out a mortgage for each individual BTL property.
One of the BTL’s is soon to become vacant, and due to the increase in value over ten years, a sale of that property would be sufficient to clear the mortgage on our principal residence, leaving all properties unencumbered.
As the value of our principal residence is less than £1m, would it be better for inheritance tax purposes to not pay off that mortgage, or, since the IHT relief is now £1m, would it be better to pay off the mortgage and take advantage of the IHT relief as I believe it is only applicable to the principal residence?
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