Not pertinent to me…
Mother of an acquaintance is sadly on borrowed time. He ‘thinks’ that when she passes, if her property, currently valued at £500k, is not sold for two years, but rented out or used as an AirBnB, then it is not taken into estate calculations for IHT.
I think ( darent say that) it’s complete and utter BS. Even if not sold, its current market value at the time of death will be used as a figure for IHT calculations.
I’m flabbergasted by this opinion, which has come from a third party ( probably living on planet Zog)
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Not one I've heard of but the income from rental would be taxable somewhere wouldn't it? I mean you can try not declaring it but HMRC are improving all the time at detecting this sot of thing.
There is stuff around if there was a partner and his full allowance wasn't used it can be transferred but I don't know the ins and outs.
Always best to get professional advice really,..
Last edited by: smokie on Mon 14 Oct 24 at 20:24
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There is an inheritance tax provision which makes the first £175k of the family home a tax free allowance providing it is left to a direct descendant - child or grandchild.
I believe this is doubled to £350k if the deceased was previously married and the allowance not then used.
Two warnings:
Inheritance tax is 40%. Given the size of the allowance your friend should discuss with a legal professional - what the rules are, whether the terms of the will are appropriate etc. Relying on a motoring forum is a non-starter.
Second point - Reeves budget in a couple of weeks could be a gamechanger as she looks for ways to increase taxes. Entirely possible inheritance tax rates and allowances could change radically
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I agree this sounds like nonsense and that proper advice is needed.
One simple point is that if she is a widow who inherited her deceased husband’s estate then she has inherited his IHT allowance too. This gives a total of £1m allowance under current rules.
It never ceases to amaze me what twaddle people believe on IHT and tax dodges.
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I'll stick my neck out and say the let it to holidaymakers thing is, relation to a home that's currently a personal asset, rollox.
Proper advice needed.
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Probably not in the above case
If the deceased's property is left unsold
When the IHT is due there could be problems - if there is cash/shares etc around these can be used to help pay an tax due. Unfortunately, if there is insufficient money the executor expected to borrow the cash from a bank and pay the IHT bill i.e. Very Expensive borrowing!
That was the case of somebody I know. About 15 years ago he had inherited a relative's home and rented it out to another relative for a modest rent.
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>> I agree this sounds like nonsense and that proper advice is needed.
>> One simple point is that if she is a widow who inherited her deceased husband’s
>> estate then she has inherited his IHT allowance too. This gives a total of £1m
>> allowance under current rules.
>> It never ceases to amaze me what twaddle people believe on IHT and tax dodges.
>>
Minor point, but if, as in the case of my recently deceased mum, the spouse died before 1974, it's not quite as simple. We didn't qualify for the £325k IHT allowance for him. He died in 1973, before they'd invented it, so no exemption possible.
We did get £100k, minus a percentage, under the old Estate Duty rules though.
Anyway, might just be a handful of people left that this affects. She ended up with a total of £690k allowable from memory, rather than the million.
We WERE able to use the extra main residence thing for him as well as her though.
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The estate can't commence renting it out, or using it as an AirBnB. As soon as probate is granted the process of transferring title to the acquaintance must begin, with all the IHT implications.
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>> The estate can't commence renting it out, or using it as an AirBnB.
I didn't know that!
What a great shame - it would be useful to help pay fees, help pay any mortgage / bills not covered by life insurance or just an extra income for the beneficiaries.
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>> The estate can't commence renting it out, or using it as an AirBnB.
Strictly speaking thats not cut and dried. As a beneficiary you have a duty to maintain, secure or maximise the value of the estate for IR. When you apply for probate you have to apply for a tax reference, which is paid by the probate office to IR. (or it was when I did it)
So if probate is likely to be lengthy, you could air bnb it, however the income (or the projected income) needs to be included in probate. And there is the tricky part, you would have to forecast the income in the total estate for probate.
It can get tricky in lengthy probate, if for example the roof blows off the probate property, you could be responsible for fixing it.
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IHT question - smokie
