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Exit Strategy


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After Having built a successful portfolio (whether it is 2-3 properties or 20+properties) and preparing for future generation family members to take the throne, what is deemed an efficient exit strategy given current tax implications ie: capital gains , inheritance. Is it best to Sell? Transfer ownership to next of kin? Or are there other methods? 

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There are plenty of different ways - but - the main factor counts is if your next of kin wants to take the Throne.

They may not want to be a Landlord and have other interests, as such the exit plan is rather simple? Sell the investment properties, build a bank account and help them build their own Throne.

If they are up for being a property investor. Then you can start passing partial ownership bit by bit keeping under tax thresholds. As well as remembering Inheritance Tax will come into play if you die early. So a key to this is staying alive!

You can talk succession planning with an accountant to come up with a plan. It's never too early to start but if you have some miles to go yourself its wise not to tie your hands. 

When it comes to Capital Gains, Inheritance Tax and so forth - dont forget about Life Insurance. Infact we have a few property investors that also cover the oustanding debt of their property empire. Next of kin - therefore on death will receive a big payout from life insurance to the trust with instructions to pay Capital Gains, Inheritance Tax and Mortgage Debt. To allow an easy transition.

As one thing many property investors forget, is if they dont plan ahead. It's not easy for a First Time Buyer, First Time Landlord and young child to get a Several Mortgages to even retain the empire there parents built up.

:wub: Get Mortgage Advice from my Team at Bespoke Finance on 08009202001 or email hello@bespokefinance.info 
:ph34r: 
Please don't take my messages on Property Hub as Personal Financial Advice, just a rambling guy passing time on a Coffee Break.
 

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Perhaps @haf1963 but on the other hand. You can sell the whole company (rather than individual properties) to a 3rd party. This can result in a lower SDLT bill as they pay that on the price of the shares not the price of the properties. 

As shareholders I think you mean @MatthewM and that is an advantage for inheritance or succession planning.

Though always nice to talk to an accountant to come up with an exit plan.

:wub: Get Mortgage Advice from my Team at Bespoke Finance on 08009202001 or email hello@bespokefinance.info 
:ph34r: 
Please don't take my messages on Property Hub as Personal Financial Advice, just a rambling guy passing time on a Coffee Break.
 

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@Adam Hosker what would be the difference between Directors/shareholders.

This is potentially something me and my dad could be looking to do as he is nearly 60 and i am nearly 30.

As my parents have a poor pension plan, my idea at the moment would be to set up the ltd company in which we are both part of, share the net profits we generate, then when the dreaded time comes, I will take full ownership of the company.

Also i see you are based in Pudsey, so i may contact you regarding broker services in the future when the time is right.

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Just terminoligy @MatthewM

Anyone can be the Director of the company, that just means they are in "controll" of day to day activities.
It's Shareholders that own the company, so yes it can make sense for Parents and Children to be shareholders for succession planning. 

:wub: Get Mortgage Advice from my Team at Bespoke Finance on 08009202001 or email hello@bespokefinance.info 
:ph34r: 
Please don't take my messages on Property Hub as Personal Financial Advice, just a rambling guy passing time on a Coffee Break.
 

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Well worth thinking about as early as possible if the plan is to build a portfolio, figure out what is right for you and next of kin, however... We all know taxes and circumstances can change over the long term, so I'd say plan what you can for now, but don't agonise over it too much as it might ultimately be out your hands if things change 

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