Inheritance tax question

[H0TB]

Yes you can call me thick.

If I'm married and my house is worth £550,000
I have two children both adults

What happens to the money from the sale of the house? Do they pay inheritance tax?

If you leave your house to your DH absolutely or on a life interest trust there is the spousal exemption so no IHT until the second death. Your allowances automatically put together so you have £1m tax free. You pay IHT at 40% on the estate above £1m on the second death. Not advisable to leave house to kids on first death as you forfeit your spousal exemption and you need to reasonably provide for your spouse anyway. IHT is paid out first from the estate before any beneficiaries take anything.

Not thick, just uninformed. When do you mean selling the house? After you die? What is in your will? Does your spouse inherit everything or have you shared the house? Lots of info is needed to answer your question.

A couple who own property worth at least £350k can leave a million pounds to their children if they leave it to each other first, not necessarily on trust. The second to die uses the firsts unused allowances, as gifts between spouses are exempt from IHT.

Leaving to children on first death is problematic in many ways; children’s divorce, capital gains tax.

It is also significant whether you and dh are joint tenants or tenants in common.