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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15838
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Good afternoon, i need advice on inheritance tax, can you help

Resolved Question:

Good afternoon, i need advice on inheritance tax, can you help with this?
jim higgins
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

I can but try. What is your question?

Customer: replied 2 years ago.

Hello, i have been living in a house for three years in a position of caretaker if you like, with it going back to the estate after my death.

I have now been left the property in the owners will and my share of the inheritance tax is 20,000 pound. House has been valued at 250000.

Am going to have to sell and buy another home cause i would have no reserve fund if i pay the tax in one go, i dont want to pay monthly on my pension niether.

So if i sell the property and it fetches more than 250000, 1, will tax man want more and 2, how much more?

Expert:  TonyTax replied 2 years ago.
Thanks.

Can you clarify what you mean by your having lived in the house as a caretaker please. Has the owner now died with the house coming to you? Is the figure of £250,000 the probate value? What do you expect it to sell for?

Customer: replied 2 years ago.

The property was left empty for 12 years, and when my marriage ended my ex in laws asked me if i would like to move in and finish the project, and to then live in it rent free till i pass on.

Inside the property is a 133 year old gwr railway carriage thats used as two bedrooms and bathroom toilet shower, so being unusual, the valuations have been between 200,000 and 300,000.

Because of trouble with family, the owner changed his will before he died and left me the property, these were probate valuations.

Honestly dont know what it would sell for, have been advised to place it in an on line auction

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I do some calculations and draft my answer..

Customer: replied 2 years ago.

ok thank you

Expert:  TonyTax replied 2 years ago.
Hi again,

I assume that the deceased estate does not have enough liquid cash to pay the Inheritance Tax liability. Normally, in such a situation, the estate's assets are sold to provide the cash to pay the tax with the balance of the cash going to those named in the will as the legatees. The property would not normally be put into the name of the person it was left to before the IHT liability was settled unless some kind of guarantee was in place.

If the probate value is £250,000 and the property is sold shortly after for significantly more, the tax office may well seek to have the actual sale price substituted for the probate value in the Inheritance Tax account which would yield extra IHT (sale price - probate value x 40%).

If the property is being sold by the estate (as opposed to by you) a significant amount of time after the death of the owner for significantly more than the probate value, then the tax office may not query the probate value and the estate will have Capital Gains Tax to pay on the difference between the probate value (£250,000) and the sale price. If the sale by the estate is within the tax year of death of the owner or either of the next two tax years, the first £11,000 of the gain will be tax free with the balance being taxed at 28%.

If the house in now in your name and it is your main or only home, you should be able to sell it tax free as you will read in HS283 here.

I hope this helps but let me know if you have any further questions.









TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15838
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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