Tag Archives: Inheritance tax

Barry’s story – it could have been you! Financial Advice, Landlord News, Latest Articles, Property News

Barry’s story was written by the Mark Alexander back in December 2010. It has since been updated and re-published several times. The dates, times and people are fictional but the story is based on real life events.

It’s a modern update of the classic “A Widow’s story”, this time written as a cautionary tale for landlords and their families.

Barry is 53 years old and married to Sharon. They have three teenage children; twin girls aged 15 and a 13 year old son. Barry worked as a self employed salesman in the plant hire business. Sharon had a part time secretarial job in a local school.

Barry and Sharon purchased their first investment property in 1996.

As property values have risen they have continuously remortgaged and used a proportion of the equity released as deposits to purchase additional rental properties. They also saved a proportion of the equity released for a rainy day. To accelerate the growth of their portfolio Barry and Sharon raised extra cash for deposits by remortgaging their home. The profits from Barry’s plant hire business covered the family’s commitments comfortably.

They had accumulated a portfolio of 23 properties with a combined valuation of £1,650,000, against which they had mortgages of £1,400,000.  The portfolio produces rental income of £87,000 per annum. Their rainy day fund amounted to just over £64,000. By having all of the above in place you might be forgiven for thinking that they had set themselves up with a very safe future.

On Sunday 21st December Barry had a bad day. He was on the way home that evening having just been out to fix a tenants leaking shower tray when the traffic on the M6 came to a grinding halt. Barry managed to stop his car, avoiding the lorry in front of him, but the car behind him ploughed into the back of him, wedging his car under the back of the lorry.

The emergency services managed to free Barry from the wreck and his only damage was shock, whiplash and major bruising to his legs. However, two days later Barry collapsed whilst out shopping for last minute Christmas presents. He was rushed to hospital where it was discovered that a blood clot in Barry’s leg had passed to his brain. Barry had suffered a major stroke.

He lost his speech and most of the use of one side of his body. The family were in tatters. Sharon had to give up work to care for him.

Up until having a stroke Barry had managed the property portfolio and taken care of most of the maintenance himself. Could Sharon care for her husband, her family and the management and maintenance of the property portfolio too?

They considered putting the properties on the market but soon realised that after deducting selling costs and CGT there wouldn’t be much money left over. They would also lose their income and they would be leaving their tenants in a difficult predicament too. Sharon has had to employ a lettings agent to manage the portfolio. Since then it has cost the family an average circa £3,000 a month to pay for ongoing maintenance and management.

Fortunately there has been some good news, at least financially. First, low interest rates have meant that Barry and Sharon’s mortgages have got much cheaper than when they started their property rental business. Many of their mortgages have reverted to tracker products due to their fixed rates coming to an end. They are focussing on Barry’s recovery. What will happen when interest rates go back up again though? How will the restrictions on finance cost relief for individual landlords affect them?

The real saviour for the family has been insurance. Fortunately, Barry and Sharon were astute enough to insure against these eventualities. They took out life assurance policies that pay out a regular monthly income right up to Barry’s 65th birthday. These policies were written on the basis that they also pay out in the event of a critical illness. The family are therefore confident that these provisions will see them through these troubled times and out the other side. They will then revert to plan A, which was to live off surplus rental income over and above the mortgage payments on their portfolio or to sell the properties and live off their gains.

What insurance provisions have you made for your family?

How are you investing the windfall of increased cashflow that record low interest rates have produced for your family?

Have you made similar provisions to Barry and Sharon?  If you haven’t it may not be too late, we want to help.  If you have already taken advice and put insurances into place we would like to introduce you to one of our recommended advisers to review your policies and ensure they are competitive. Most important of all, to ensure that the right person gets the right money at the right time.


Property Portfolio Review Spreadsheet – FREE Download Buy to Let News, Financial Advice, Landlord News, Latest Articles, Property Investment News, Property Investment Strategies, Property News

Property Portfolio Review Spreadsheet - Free DownloadOur property portfolio review spreadsheet is now available as a free download.

This property portfolio review spreadsheet calculates your rental yields net of voids, the interest rate which will make your portfolio cash neutral and the true costs of rental void periods. It is incredibly easy to use, simply fill in the boxes and the spreadsheet does everything else for you. You don’t need any IT or accountancy skills to use this spreadsheet. Continue reading Property Portfolio Review Spreadsheet – FREE Download


So you think your property portfolio is as “Safe as Houses”! Advice, Estate Planning, Landlord News, Latest Articles, Property News

So you think your Estate is as “Safe as Houses!Property investors are passionate about building property portfolios, income and the potential for growth and take a lot of time and effort in financing and planning their properties and assets.

But are the portfolios effectively protected for family and loved ones in the future?

In essence, is your estate ‘as safe as houses’? Continue reading So you think your property portfolio is as “Safe as Houses”!


Interesting Landlords Tax Question Landlord News, Latest Articles, Property News, Tax & Accountancy, Tax and Accountancy

Interesting Landlords Tax QuestionMalcolm Ingham has raised an interesting landlords tax question

“Our son has a mortgage on a leasehold flat which he owns.Having gone through some lean years in a business he runs, the bank of mum and dad have loaned considerable sums to him, which he will find difficult to repay. He has offered to let us have his flat instead, as we already have a portfolio of let property. Could we have an agreement drawn up so that we become beneficial owners (but not legal owners) and be able to receive all rents and cover all ongoing costs? If so, would that avoid inheritance tax when we die, and in the meantime can we claim tax relief on the running costs, against the rental income?” Continue reading Interesting Landlords Tax Question


Property Portfolio Review Spreadsheet – FREE Download Landlord News, Latest Articles, Property News

Property Portfolio Review Spreadsheet - Free DownloadOur property portfolio review spreadsheet is now available as a free download.

This property portfolio review spreadsheet calculates your rental yields net of voids, the interest rate which will make your portfolio cash neutral and the true costs of rental void periods. It is incredibly easy to use, simply fill in the boxes and the spreadsheet does everything else for you. You don’t need any IT or accountancy skills to use this spreadsheet. Continue reading Property Portfolio Review Spreadsheet – FREE Download


Landlords advice – 10 things landlords should seriously consider before it is too late Buy to Let News, Cautionary Tales, Landlord News, Landlords Insurance, Landlords Stories, Latest Articles, Property Investment News, Property Investment Strategies, Property News

Landlords advice – 10 things landlords should seriously consider before it is too late

1. Know when to stop investing and start living. I have a friend who is fast approaching 50 years old who owns 82 properties. His goal is to get to 100. What’s the point? 100 is just another number isn’t it? What would you rather own, 100 properties up North or one large shopping Mall? I know which I would choose! Let’s say his properties are worth just £50k each, that means his portfolio is worth about £4 million. I can’t find a period in history when property values haven’t doubled in value over 20 years – feel free to correct me if you know different. Even if he’s got 100% mortgages today and never pays a penny off the capital he’s likely to be worth at least £4 million net well before he’s 70 if history repeats itself. Think what effect inflation will have had on his rental income and net profits too! Continue reading Landlords advice – 10 things landlords should seriously consider before it is too late


Thinking about Legacy Protection as I’m getting married next month :) Financial Advice, Landlord News, Landlords Stories, Latest Articles, Property Investment Strategies, Property News

The future Mrs Alexander

I will get around to talking about legacy protection in this article but first I want to set the scene by sharing my very happy news with you.

I’m getting married next month!

I’m a very lucky, very happy man 🙂

The picture to the left is of my wife to be, Svetlana. It was taken two years ago by her brother in law for a photography competition which he won with this picture. We’re off to Florida for a beach wedding and honeymoon, the big day is October 12th and we are getting married at 12:10 – therefore, 12:10 on 12/10/2012. I should just about be able to remember that 🙂 Continue reading Thinking about Legacy Protection as I’m getting married next month 🙂


Buying a property with a regulated tenancy – READERS QUESTION Financial Advice, Landlord News, Latest Articles, Property Investment Strategies, Property News, UK Property Forum for Buy to Let Landlords

I am considering buying a property with a regulated tenancy. It is occupied by one person who is getting on in age. As I understand it once the tenant is no longer living there, either by going into residential care or moving or passing away, the property becomes mine to do with as I wish. Is there anyway that some one not presently living there can claim to take over the tenancy, such as a relative or friend who moves in to care for the elderly person or just another family member.

Also if I purchase the property in the name of one of my children does this create problems with HMRC? Continue reading Buying a property with a regulated tenancy – READERS QUESTION


Trading Company BuyToLet + Landlords Tax Strategy Buy to Let News, Landlord News, Latest Articles, Mortgage News, Property Investment News, Property Investment Strategies, Property Market News, Property News, Tax & Accountancy, Tax and Accountancy

It is not easy to arrange a BuyToLet mortgage for a trading company, the few lenders that do offer loans to limited companies usually insist that the company is a Single Purpose Vehicle, often referred to as an SPV.

This is an issue which our readers often ask us about, particularly how to structure financing effectively or how to get the cash out of a trading company to invest into BuyToLet personally without paying too much tax on the cash they take out of their company. An email today from a lady called Sharon inspired me to write this article. Sharon’s email is below:- Continue reading Trading Company BuyToLet + Landlords Tax Strategy


House price crash triggers tax windfall on inherited homes Financial Advice, Latest Articles, Tax and Accountancy, Tax News

Falling house prices has meant up to £90 million has been overpaid in inheritance tax by families and friends who have been left a home in a will.

Insurance firm NFU Mutual reckons the tax is reclaimable under a special rule called sale of land relief. Continue reading House price crash triggers tax windfall on inherited homes


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