There are different issues, depending on where the property is located – is it a UK property or is it an offshore one.

Holding the value of a UK property into an excluded property trust is acceptable, not the actual property itself because only offshore assets can be put into this type of trust.

If you put cash assets into an Excluded property trust, borrow the money and use it to buy a UK property, the growth will still be liable to UK inheritance tax, but the original capital that has been borrowed will be a debt on the estate and therefore deducted from the estate for IHT purposes.

It is a worthwhile exercise for people with lots of assets coming to the UK and buying a property.

If you put offshore properties into an Excluded property trust you need to be very careful about that particular country’s tax jurisdiction. Some countries like France, Spain, Italy don’t even recognise trusts which will definitely cause all sorts of problems. In those particular countries, a company is usually a much better solution than a trust.

As a general rule, dealing with investments in Excluded property trust is much better than dealing with properties. The reason for that is taxation on properties is quite complicated in most countries and needs careful navigation of jurisdictions.

We can advise on the setting up of an Excluded property trust, but we are not familiar with tax laws in every country so you will need specific advice in the country where the property is held.

Usually, it’s more beneficial to put money into the excluded property trust, borrow it and use it to buy property in the UK or abroad.