IHT threshold £475?

mrs_baggins

Hello, I am trying to get my financial affairs in order but think I may be too late.

I own 3 houses 2 of which are rental properties and one is owned as tic with son. I am single by the way.

I have just been reading the gov site regarding IHT and wanted clarification on a point. It states

If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £475,000.

So am I reading this correctly? If when I die if my entire estate is worth £474.000 for arguments sake and I leave the houses to my children there is no IHT to pay.? or does it mean my main house has to be worth 475k.
Thanks

Keep_pedalling

No, your home must be worth the value of the residential nil rate band or more to be able to claim that in full. So assuming you do not die before April the 6th next year you will be able to leave an estate of up to £500K IHT free providing your home is worth £175k or more.

Should your circumstances change and you have to sell your home to move into sheltered housing or residential care for instance, your estate will still be able to claim the residence nil rate band.

If your current estate exceeds £500k and it is all tied up in property you don’t have many options to reduce the level of IHT due, without risking picking up a capital gains tax bill yourself.

GrumpyDil

This explains the situation far better than I can.

https://www.moneysavingexpert.com/family/inheritance-tax-planning-iht/

GDB2222

It makes a difference whether you were married and how you became single, ie divorce or death. Sorry to be so blunt, but if your husband died you can inherit his nil rate band.

mrs_baggins

Soo.... have I got this right. If my entire estate is worth £475,000 as long as my main house is worth more than £175000 then there is no IHT to pay as long as I don’t die until after next year? For the record I got divorced Years ago

newatc

mrs_baggins wrote: »

Soo.... have I got this right. If my entire estate is worth £475,000 as long as my main house is worth more than £175000 then there is no IHT to pay as long as I don’t die until after next year? For the record I got divorced Years ago

The value of your estate would need to be in excess of £500k to attract any IHT. The £500 will be made of personal allowance of £325 + £175k of main residence allowance.