Inheritance Tax concerning land/buildings passing from parent

LordBachus

New to this so bear with me!

Unfortunately my mother passed away late last year. Her husband and her built a new house at the end of their old one back in 2002 after my brother/mom purchased a small rectangle of land to the end of next doors garden. This meant they could build across the bottom of both gardens.
My brother & mum joint own the rear rectangle of land to the new house which also covers a few feet of the actual building.
For inheritance tax my brother is looking at showing part of the land is his so therefore the probate quotes on the house are reduced by 24% (the bit he owns of the part mum/he have in their name).
One estate agent has said the land is worth minimal amount and should just show the amount he paid for it 20+ years ago. However without his permission then no-one will access the rear of the building and side so the house would technically be unsellable!

So the question really is should he show it as minimal amount or show the percentage he believes should be removed off the inheritance tax (as this will just drop the estate below threshold)?

Just to clarify, the title register shows the front part in mums name only but the other title register is in my mum & brother's name.

Any advice gratefully received as we had a quote from a solicitor to do all the probate that was £20k+ so aiming to do it all himself (with my encouragement ) This could literally save him thousands in tax & solicitors bills! Thanks in advance.

Marcon

LordBachus said:

New to this so bear with me!

Unfortunately my mother passed away late last year. Her husband and her built a new house at the end of their old one back in 2002 after my brother/mom purchased a small rectangle of land to the end of next doors garden. This meant they could build across the bottom of both gardens.
My brother & mum joint own the rear rectangle of land to the new house which also covers a few feet of the actual building.
For inheritance tax my brother is looking at showing part of the land is his so therefore the probate quotes on the house are reduced by 24% (the bit he owns of the part mum/he have in their name).
One estate agent has said the land is worth minimal amount and should just show the amount he paid for it 20+ years ago. However without his permission then no-one will access the rear of the building and side so the house would technically be unsellable!

So the question really is should he show it as minimal amount or show the percentage he believes should be removed off the inheritance tax (as this will just drop the estate below threshold)?

Just to clarify, the title register shows the front part in mums name only but the other title register is in my mum & brother's name.

Any advice gratefully received as we had a quote from a solicitor to do all the probate that was £20k+ so aiming to do it all himself (with my encouragement ) This could literally save him thousands in tax & solicitors bills! Thanks in advance.

...or cost a great deal more when he makes the wrong decision. You seem to be looking at a short-term trade off (saving some IHT) v a possible long term headache.

By all means do the main part of probate hand in hand with your brother, but on this particular aspect, get some professional advice - from someone who is insured to give it. Nobody here is.

mattojgb

Not sure you will get an answer to that question, but maybe start by advising whether the part owned with brother was owned as joint tenants or tenants in common? What is total value of estate? Is there any nil rate band to be carried over from husband's death?

Keep_pedalling

No point guessing the valuation, having a paid for valuation from a RICS surveyor is going to be the safest way to satisfy HMRC that you are submitting a true valuation. Is there a deed of trust in place documenting what % each of the owners holds? 

A well drawn up will could have avoided an IHT liability on the first death with the use of an immediate post death interest trust clause. If IHT is actually an issue that could still be achieved through a deed of variation. This might also avoid some CGT in the future.