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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IHT question - smokie
