Inheritance Tax Question

Konisberg

Hi

I wondered if anyone could answer this rather complicated question regarding inheritance tax. The fact are Total estate of 460k cash and 400k property. The property is split one third two thirds between two sisters. One of the sisters will buy out the other sisters one third but will need to raise 140k. I understand that if you propose to live in the inherited property you can pay inheritance tax by instalments of 10% per year, but is this only if the total estate is property. ie will this not apply because of the cash? We have calculated that after 312, the total taxable estate will be 548k so 220k tax due less funeral exp etc. The sisters will each have 80k each after tax or say 190k before IHT. Could the sister selling the share pay half the IHT now and the other sister but her thrid of the property out of her share of the combined inheritance and inheritace tax due and then pay back the IR at 10% per year? This way she wouldn't have to raise such a large sum to buy out the other sister and the interest rate will be smaller.

Any advice appreciated on this specific question will be much appreciated.

milla

Hi Konisberg

Could I start the ball rolling by asking WHO has died ? Is it a parent ? and has the second £312,000 been previously used ?

Konisberg

Hi Milla

The sisters' father has died. His wife died 2 years ago and her allowance was used up.

regards

milla

Hi there

In that case I would recommend that you give the helpline a ring
http://www.direct.gov.uk/en/Dl1/Directories/DG_10026997.

They were fantastic with me !

Konisberg

Thanks Milla. I did. They were very helpful. IHT due on the property element of an estate which is not being sold can be paid in installments over 10 years