Inheritance tax and equity release

wiltsgrandad

Yes i am married and we do own the house. The loan would only apply after both of us passed away. The house would then be left to the children, none of whom would have a financial interest in the actual property.  I was informed previously that the loan comes off the estate, which does help with inheritance tax?

wiltsgrandad

That should have read - "the repayment of the loan"

RAS

So you could have £1m IHT allowance between you. How much is the house worth?

Keep_pedalling

wiltsgrandad said:

Yes i am married and we do own the house. The loan would only apply after both of us passed away. The house would then be left to the children, none of whom would have a financial interest in the actual property.  I was informed previously that the loan comes off the estate, which does help with inheritance tax?

It is never wise to name a property in a will, as by the time of your death you may longer own it. In this case it would need to be sold anyway to pay back the loan.

wiltsgrandad

RAS said:

So you could have £1m IHT allowance between you. How much is the house worth?

£420000 currently

wiltsgrandad

Keep_pedalling said:

wiltsgrandad said:

Yes i am married and we do own the house. The loan would only apply after both of us passed away. The house would then be left to the children, none of whom would have a financial interest in the actual property.  I was informed previously that the loan comes off the estate, which does help with inheritance tax?

It is never wise to name a property in a will, as by the time of your death you may longer own it. In this case it would need to be sold anyway to pay back the loan.

I wouldn't name the house, just that the loan is to paid off from the estate of which of us is the last to go

Keep_pedalling

wiltsgrandad said:

Keep_pedalling said:

wiltsgrandad said:

Yes i am married and we do own the house. The loan would only apply after both of us passed away. The house would then be left to the children, none of whom would have a financial interest in the actual property.  I was informed previously that the loan comes off the estate, which does help with inheritance tax?

It is never wise to name a property in a will, as by the time of your death you may longer own it. In this case it would need to be sold anyway to pay back the loan.

I wouldn't name the house, just that the loan is to paid off from the estate of which of us is the last to go

If the house has a charge on it that does not need to be covered in the will either. 

wiltsgrandad

Keep_pedalling said:

wiltsgrandad said:

Keep_pedalling said:

wiltsgrandad said:

Yes i am married and we do own the house. The loan would only apply after both of us passed away. The house would then be left to the children, none of whom would have a financial interest in the actual property.  I was informed previously that the loan comes off the estate, which does help with inheritance tax?

It is never wise to name a property in a will, as by the time of your death you may longer own it. In this case it would need to be sold anyway to pay back the loan.

I wouldn't name the house, just that the loan is to paid off from the estate of which of us is the last to go

If the house has a charge on it that does not need to be covered in the will either. 

So would this action effectively reduce the IHT liability?

Keep_pedalling

wiltsgrandad said:

Keep_pedalling said:

wiltsgrandad said:

Keep_pedalling said:

wiltsgrandad said:

Yes i am married and we do own the house. The loan would only apply after both of us passed away. The house would then be left to the children, none of whom would have a financial interest in the actual property.  I was informed previously that the loan comes off the estate, which does help with inheritance tax?

It is never wise to name a property in a will, as by the time of your death you may longer own it. In this case it would need to be sold anyway to pay back the loan.

I wouldn't name the house, just that the loan is to paid off from the estate of which of us is the last to go

If the house has a charge on it that does not need to be covered in the will either. 

So would this action effectively reduce the IHT liability?

No, but between you you don’t have sufficient net worth to have a liability in the first place.

RAS

As above, you're unlikely to be liable for IHT any way so there is nothing to reduce. Unless you get some major financial boost from an inheritance or the lottery.