Inheritance Tax And House Sale

drlabman

When someone dies leaving a house as part of the estate, and the total value of the estate is over the inheritance tax threshold, at what point does any inheritance tax have to be paid? In the current climate, I could imagine a house being on the market for some time - would the tax need to be paid before the house is sold?

00ec25

as you are seeking facts rather than explanations why not read up on it yourself:

http://www.hmrc.gov.uk/inheritancetax/paying-iht/

holly_hobby

6 months from the (end of the) month in which the decd died.

HMRC may accept instalments or other arrangement depending.

Tsfs between spouses are exempt.

Ensure if this is on death of the surviving spouse, that the administrator/executor applies to HMRC for the tsf of any unused IHT nil rate exemption applying the pre-deceased spouse.

Your probate solicitor should guide.

Hope this helps

Holly

John_Pierpoint

Judging by my experience [some quick succession relief but no cash] HMRC could put a legal charge on the house to make sure that the conveyancing firm could not pay you the proceeds of sale, before HMRC got its share.

I had a little pantomime, where the final tax payment (plus interest) was paid but "joined up government" had not then removed the legal charge, but had "archived" the records.

Fortunately my archive is just above my bedroom ceiling.:D

getmore4less

drlabman wrote: »

When someone dies leaving a house as part of the estate, and the total value of the estate is over the inheritance tax threshold, at what point does any inheritance tax have to be paid? In the current climate, I could imagine a house being on the market for some time - would the tax need to be paid before the house is sold?

If priced right it will sell, as IHT is due a pesermistic(some would say realistic) probate value is a target.

If the house has to be sold and is not of any use then delays just cost time and money in the long run.

SeniorSam

drlabman wrote: »

When someone dies leaving a house as part of the estate, and the total value of the estate is over the inheritance tax threshold, at what point does any inheritance tax have to be paid? In the current climate, I could imagine a house being on the market for some time - would the tax need to be paid before the house is sold?

Just thought it may be worth noting that a Will can be changed within 2 years of death if beneficiaries agree. This may be appropriate to save IHT in some circumstances. Consult a professional in this area if required.

Sam

holly_hobby

SeniorSam wrote: »

Just thought it may be worth noting that a Will can be changed within 2 years of death if beneficiaries agree. This may be appropriate to save IHT in some circumstances. Consult a professional in this area if required.

Sam

Yep this is a Deed Of Variation - which must be exercised within 2 yrs of decds death, and all beneficiaries affected by the DOV must agree to the amendment.

Utilised to mitigage IHT and CGT.

Hope this helps

Holly

manzanilla

It is normal if a house is to be sold to pay the IHT by installments - 10% within six months, then you have a year to sell the house and pay the rest.

For some reason I cant link to HMRC to prove this

holly_hobby

manzanilla wrote: »

It is normal if a house is to be sold to pay the IHT by installments - 10% within six months, then you have a year to sell the house and pay the rest.

For some reason I cant link to HMRC to prove this

Yes thats correct , and as briefly touched on earlier, may be actually discharged and paid by instalments over an extended term of up to 10 yrs ( in respect of property and certain other assets as determined by HMRC) ...

Refer ...

http://www.hmrc.gov.uk/inheritancetax/paying-iht/yearly-instalments/index.htm

And applicable interest if payment by instalments is agreed ...

http://www.hmrc.gov.uk/inheritancetax/paying-iht/yearly-instalments/interest-instalments.htm

Hope this helps

Holly