I own rental properties
In short
Rental properties are part of your estate for inheritance tax and usually need probate to transfer. A larger portfolio can push your estate over the IHT thresholds, and ongoing tenancies must be managed during administration. Clear wills, possibly using trusts, help your executors keep the income flowing and pass the properties on efficiently.
The situation
You own one or more buy-to-let or rental properties.
What happens legally
A portfolio adds tax, administration and continuity considerations:
- Rental properties count towards your estate for inheritance tax, which is charged at 40% above the available thresholds.
- The properties pass under your will (or intestacy) and normally require probate to transfer or sell.
- Tenancies, mortgages and management obligations continue during administration and must be handled by your executors.
- Trusts can be used to pass property income to beneficiaries while keeping control or protecting vulnerable heirs.
The risks
- A portfolio can create a substantial inheritance tax bill, sometimes forcing a sale.
- Executors unfamiliar with lettings may struggle with tenants, mortgages and tax during administration.
- Jointly held or mortgaged properties complicate valuation and transfer.
Recommended actions
- Value the portfolio and model the potential inheritance tax exposure.
- Make a will that deals specifically with the properties and any mortgages.
- Consider trusts or lifetime planning to manage IHT, with specialist advice.
- Leave clear records of tenancies, agents, mortgages and insurances for your executors.
Sources
- Inheritance Tax Act 1984 — legislation.gov.uk
- GOV.UK — Inheritance Tax thresholds and rates
- GOV.UK — Applying for probate
- Reviewed by
- ClearLegacy editorial team
- Last reviewed
- June 2026
- Next review
- December 2026
- Jurisdiction
- England & Wales
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