Do i have inheritance tax to pay?

bartman100

Both my mother and father passed away in 2012, leaving me sole executor of their will and leaving me their home. I moved into the house in 2012 and now feel ready to move on. Do i have to pay inheritance tax? or do i treat the property as my own? all legal documents are in my name if that helps. Sorry for question i keep getting told i DO & then I DON'T have to pay it by family!
The house was valued at £375,000

AdrianC

IHT would have been paid - if need be (it depends on the total size of their estates) - when probate was granted. Did you get probate sorted?

When you say "All legal documents are in my name", what do you mean by that?

TrickyDicky101

IHT should have been dealt with as part of processing the deceaseds' estates. What was the value of their estates when they passed (that includes the value of the house)?

bartman100

with regards to docs i mean deeds to the house, my mum passed in sept 2011, my father them passed in July 2012 they left me the house and £20,000 in a bank account, this was all done through a solicitor who held their will.
The house was never valued when they died, I did a bit of upgrading inside and moved straight in, I was renting at the time so had no home of my own.
They bought the house back in the 80's and paid £32,000 for it and lived in it until they died.

Clutterfree

Was the house not valued for probate purposes?

bartman100

Yes it was, i remember estate agent coming round and the property being valued between £325,000 - £350,000

AdrianC

bartman100 wrote: »

Yes it was, i remember estate agent coming round and the property being valued between £325,000 - £350,000

Your mother, presumably, left her half of everything straight to your father.
When he died, his estate gained the use of her IHT threshold - the amount that's zero-taxed.
So each of them had £325k to leave before tax was paid, which means your father could leave up to £650k. The house and money was far below that, so zero tax payable.

Even if it had been payable, it would have needed to be paid when their estate was settled, before the house could be transferred to your name.
http://www.which.co.uk/money/tax/guides/inheritance-tax-explained/rules-for-married-couples-and-civil-partners/

bartman100

thats correct my mother died leaving everything to my father and when he died it was all left to me.
So i assume i can sell the house and move without having to worry about IHT?

Clutterfree

bartman100 wrote: »

thats correct my mother died leaving everything to my father and when he died it was all left to me.
So i assume i can sell the house and move without having to worry about IHT?

Yes, as long as probate was granted when they died any IHT would have been paid then if over the £650k threshold.

I'm wondering if your friends are getting confused with capital gains tax? Although as this has been your residence for 4 years, I don't believe that applies either.

AdrianC

bartman100 wrote: »

thats correct my mother died leaving everything to my father and when he died it was all left to me.
So i assume i can sell the house and move without having to worry about IHT?

Yes. That's all long since wrapped up.

AdrianC

Clutterfree wrote: »

I'm wondering if your friends are getting confused with capital gains tax? Although as this has been your residence for 4 years, I don't believe that applies either.

Don't muddy the waters - it's been his primary personal residence for the entire time he's owned it, so there's zero CGT liability either.

If it had been let out, then CGT would be due on the difference between the probate value (the value at which he's deemed to have come into possession) and the current value - the 1980s sale price would be somebody else's problem entirely.