Inheritance Tax On Property

Inheritance Tax On Property

Inheritance tax on property is to be paid if the taxable value of the estate (with any gifts made by the deceased added on if they were made in the seven years prior to their death) exceeds the nil rate band. The rate of inheritance tax on property is currently 40%.

Inheritance Tax On Property

When one civil partner or spouse dies before the other, if any part of their nil rate band is unused then the unused amount may be added to the nil rate band of the surviving civil partner or spouse.

In certain circumstances, beneficiaries of a will or intestacy may receive assets in a way that is more desirable than would have been possible if the terms of the will had been observed. This is called a Deed of Variation. When such a Deed of Variation is made, a form of election can be made for inheritance tax purposes that substitutes its terms for the terms of the will (or the intestacy).

The Deed of Variation has to be made within two years of the person’s death, and it must contain a statement that relevant legislation will apply.

A similar relief is available if assets are left in trust by the deceased the trust assets are distributed directly to beneficiaries within two years of the death,

Inheritance tax on property: payment in instalments

It is sometimes possible to pay inheritance tax in equal annual instalments over a period of up to 10 years. This is especially helpful if you inherit a property that you intend to live in.

The executors will usually make an election on the inheritance tax account to arrange this. The first instalment is due six months after the end of the month of the death and subsequent instalments are paid annually on the same date. Subsequent payments include an interest charge on the amount of outstanding inheritance tax. The current rate of interest is 2.75%.

Do you have more questions? Assured Wealth and Estate Planning Solutions can advise on a number of elements of inheritance tax savings.  Talk to one of our Altrincham Estate PlanningWilmslow Estate PlanningManchester Estate PlanningWarrington Estate PlanningLiverpool Estate Planning or Knutsford Estate Planning specialist today.

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