Inheritance tax and deductions when relating to property

Bear270195

Hi, so my question is... If i make improvements to my Grandfather's house, when I inherit it can I use receipts to prove I own certain things i.e. upvc windows and thus exclude their price from the value of the house and reduce my inheritance tax.

If so, would this apply to such things as wallpaper and fixings so the valuer would not be able to take any of those things into account?

Cheeky_Monkey

No :rotfl:

Bear270195

But surely if I bought them, I own them?

ValHaller

You do own them, but your problem is proving it. If they are attached to his house, the presumption is that they are/were his. You can resolve this by getting your grandfather to acknowledge the cost in writing as a loan, which will make the items his, but will leave him or his estate owing you their cost

ognum

Inheritence tax is based on the value of the property on the day your grandfather died.

You should have got it value for IHT purposes as it was when he died, you also need to take photos before you make any changed as the District Valuer can dispute your valuation if he feels you have assessed the value to low.

You then choose to do what you want with the property, if you sell it immediately and you make more money than the probate amout then you have to declare this and pay IHT on the extra amount equally if you make less you can claim back IHT.

If you choose to make improvements prior to sale you need to keep account of the amounts involved, they can then be deducted from the sale price for IHT purposes but you may be subject to Capital Gains Tax!

ognum

OH, just retread I thought your grandfather had died!

No you cannot claim your input into his house, maybe he should consider you becoming a part owner.

tim123456789

Bear270195 wrote: »

But surely if I bought them, I own them?

No you don't.

If you permanently attach them to someone else's building (without some prior agrement agreeing differently) they immediately become the property of the building owner.

Cue legal case about the ownership of million pound painting affixed to the wall (and yes, that did happen!)

tim

ognum

I was thinking about this and maybe, I'm not sure it's legal you could make your grandad an official loan to pay for the updates, this would then be paid off from his estate when he dies prior to his estate being settled for probate.

Just a thought, any comments?

martindow

From the OP, is the situation that your grandmother has died leaving grandfather living in the house? If so and she left everything to grandfather her IHT allowance is available and no tax will be payable for the house unless it is over 650k (2x325).

roger196

[QUOTE=reduce my inheritance tax.

[/QUOTE]

How is this your inheritance tax?
How are you so certain that you will inherit this house?
What happens if grandad marries his 19 year old carer?
Is grandad's estate over the IHT nil band?

Bear270195

Martindow, yes that is the situation, thanks for the advice.

Roger196, It is already in his will since I was a child. His house is worth around £450,000