Is it possible to keep a house in the family when there is a large inheritance bill to pay?

startingout2016

If there is a large estate value of over £2m which is predominately from a single property, if the children on the receiving end of the inheritance cant afford the IHT bill of circa £600k, is the only option to sell the house to pay the IHT? 

This isn't unfortunately a house of interest that could be handed to the national trust but remain in family hands. It just happens to be in an expensive part of the country and a larger than average family home. 

Hoenir

IHT can in some circumstances be paid over a ten year period. Though with currently an interest rate of 7.75% per annum charged on late payment by the HMRC. The incentive is to there to repay earlier rather than later. 

amanda1024

There could potentially be the option to take out a mortgage on the property, depending on affordability etc.

km1500

it's really boils down to how you finance the IHT payment.

if you can do this without selling the house then that is the way forward

Savvy_Sue

startingout2016 said:

If there is a large estate value of over £2m which is predominately from a single property, if the children on the receiving end of the inheritance cant afford the IHT bill of circa £600k, is the only option to sell the house to pay the IHT? 

This isn't unfortunately a house of interest that could be handed to the national trust but remain in family hands. It just happens to be in an expensive part of the country and a larger than average family home. 

It's worth considering what the reasoning is for retaining the property, IMO. Are they good reasons? Does one of the beneficiaries wish to live in it? 

Keep_pedalling

Frankly this could be a blessi,  tying all the children financially through joint ownership can be a recipe for disaster. Sell, pay the tax, distribute the rest and move on. 

elsien

This. ^^^

What was the longer term plan B for the property and who will be living there?
This does have the potential for some serious falling out in the future if any of the beneficiaries need to realise their share of the asset, for any number of reasons.

Linton

Agree with the others.  Why do the beneficiaries want to keep the house?  What would they do with it?  If some of them wanted to live together somewhere would they choose that particular house in that condition in that location? Similarly if they wanted to get together to set themselves up as landlords.

Unless here is some aspect to the problem that has not been disclosed I strongly suggest that the house is sold, the tax paid, the money split, and people get on with their lives.  Unless you are wealthy you cant keep a house purely as a memorial to a time which has passed.

Marcon

startingout2016 said:

If there is a large estate value of over £2m which is predominately from a single property, if the children on the receiving end of the inheritance cant afford the IHT bill of circa £600k, is the only option to sell the house to pay the IHT? 

This isn't unfortunately a house of interest that could be handed to the national trust but remain in family hands. It just happens to be in an expensive part of the country and a larger than average family home. 

If they can arrange a loan facility and pay the IHT over a period of years, then it wouldn't be necessary to sell the house.

The downsides of doing so are considerable as others have already pointed out. Sentimental attachments to homes where people grew up are common and wholly understandable, but unless there is one party who can afford to buy out the others and live there themself, keeping a property 'because we couldn't bear to see someone else living there' rarely ends well.