Inheritance tax query

[Tinker]

I probably should know this myself but anyway...

An estate is being/has been valued for IHT purposes (hadn't occurred to me how quickly it becomes due). However, if subsequent house sale was for a different value is IHT then adjusted accordingly?

ie house valued at £1,000,000 now and then sells for £2,000,000 - IHT is initially due on the £1M but the remaining would become due once house sold?

Thanks

Not sure but might n't the "difference" be subject to Capital Gains on the beneficiaries rather than IHT ?

There is a set period during which if you sell the house for more you have to pay the inheritance tax on the extra money you made. It is quite a long period (10 years?) but I cannot remember quite how long.

Yes. The initial IHT value is only to work out how much tax should be paid in order to get probabte. The tax to be paid will be adjusted when the sale goes through.

The amount of tax you pay on the property is as per its value AT TIME OF DEATH. Therefore get several valuations from estate agents and take the average to put on the IHT form. They will then do their own 'homework' and if they feel that the valuation you have submitted is too low they will send their own assessor round to decide. They use sales in the immediate area of similar property types to decide whether a revaluation is required. For all cash assets the tax must be paid within about six months but the tax due on a property can be paid over 10 years at a minimal interest rate.

Thank you all. Tokentotty - I'm reading you post to say that there isn't an adjustment should the subsequent sale differ from original valuation. Am I reading that correctly?

I certainly haven't found that to be the case. Imagine the same scenario if the deceased held shares for example. You need to report the shares' value on the close of business of the date of death. Now obviously if you hold on to these shares their value could fluctuate wildly and maybe even increase 100 fold, you still wouldn't be liable for more inheritance tax. In my instance I kept the property and have renovated it and moved in so if I were to sell it all would be as per any normal sale. As LIZS mentioned, if you kept the house and sold it at a later date without it being your main residence then you would be more likely to be liable for capital gains tax than inheritance tax.

Ah, thank you, that makes sense. So really, have to make fairly quick decision to sell or retain - if put it up for sale as soon as seemly (difficult bit, we have differing view on this, quite emotional) = no change to IHT. If retain = could be liaible to CGT.

Opps. I was wrong. Sorry. I was given bad advice then as I have a flat I inherited 3 years ago and it has gone up in value. Very pleased to hear I do not have to pay IHT on the increase .

I know what you mean about it being a difficult decision Tinker, was the same for me as it was my childhood home where I'd been raised from birth and I absolutely loved it. You can take your time though if you decide you have enough money to pay the amount of tax due immediately (ie on cash assets/shares etc). We did this and then umm'ed and ah'ed for a long time as to what would benefit us most, whether to do it up and sell, do it up and rent it out or do it up and move in. You have to pay 10% plus interest every year if you do this but the interest rate was very low and if it is an emotional decision it might be worth the money to not rush into anything. We then renovated the house, sold our property to pay the outstanding tax bill and half the value of the house to my brother, the other beneficiary and then moved in. This was just over two years after my Dad died and the decision not to rush into anything was the best one we made.
Sorry - have really waffled there !!!

But shares are at a fixed discernable price at any particular time on a given day. Not so with property. I think I'm right in saying that in your case tokentotty (great name by the way!) you have had the property transferred into your name. Therefore any subsequent gains would belong to you and not the deceased's estate.

My understanding of it is if the IHT valuation is £1m and, for example, the house is sold 2 months later for £1.5m the revenue will re open the issue because on the face of it an inaccurate figure has been submitted first time round and more tax may be payable.

Yes, I see you point Tootyfrooty about teh difference.

Yes, tokentotty, horrible time which will cause tensions - I'm the overly sentimental one. Think we'll be able to fund it ok though so hope no need to rush anything.

Well that's pretty much what I was trying to say about being sure to get a good, trustworthy valuation to be honest Tooty. I know I had 3 separate valuations and did my IHT form as honestly as it could possibly have been (too bl**dy honestly probably !!) and STILL they didn't accept the valuation until one of their people had been over to check it as there's such a variation of houses just on my road and the fact that mine is a standard semi and in no way comparable to the detatched mansions further down, gave them the idea that I was on the fiddle. If your valuation is true then there shouldn't be any wild deviation from what you submitted. Believe me, if the market bottoms out when you sell it two months later I can't see them rushing to pay you back....