Second query in succession!
Estate has large property portfolio, and IHT to pay.
Legatee would rather the properties aren’t part-sold to pay IHT, and would prefer to take on bank borrowing to enable the IHT to be paid outright, so that properties can be passed ‘intact’, but with responsibility for borrowing also passing to the legatee.
Legatee is a discretionary trust. If the legatee borrows money to pay the IHT, can it deduct the interest cost as a rental expense against rental income from the properties for income tax purposes, once they have been transferred?
Would it be better (or possible) for the executors to borrow, and then transfer the properties and the borrowing to the legatee, or would this make no difference to the income tax treatment?
Many thanks for any comments or guidance!