This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Renovate property before Inheritance tax / probate?

David_60
Posts:2
Joined:Wed Oct 17, 2018 5:43 pm
Renovate property before Inheritance tax / probate?

Postby David_60 » Wed Oct 17, 2018 5:54 pm

Hello, there will be a large inheritance tax bill on an estate, much of it on a property. However it is in poor condition. It would need painting, new kitchen carpets etc. At least 3 or 4 months work. Would the estate be allowed to renovate the property, using estate funds? The beneficaries would not able to afford the renovations. Would they be given more time than the usual 6 months?

Thank you

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Renovate property before Inheritance tax / probate?

Postby AGoodman » Fri Oct 19, 2018 3:22 pm

Yes. Not usually something the estate would do (albeit not impossible if it improves the value for sale) but it could definitely do it with the agreement of the beneficiaries whose money they are spending.

It wouldn't affect the probate value as that is taken as at date of death.

If the estate has the cash, can it not distribute the property and cash to the beneficiaries and let them do the work?

It is still necessary to pay the IHT by the 6 month deadline but remember that IHT can be paid on property in instalments. Only the first 1/10th of the tax on the property would have to be paid within 6 months.

David_60
Posts:2
Joined:Wed Oct 17, 2018 5:43 pm

Re: Renovate property before Inheritance tax / probate?

Postby David_60 » Mon Oct 29, 2018 1:15 pm


If the estate has the cash, can it not distribute the property and cash to the beneficiaries and let them do the work?

It is still necessary to pay the IHT by the 6 month deadline but remember that IHT can be paid on property in instalments. Only the first 1/10th of the tax on the property would have to be paid within 6 months.
Thanks. I thought the beneficiaries cannot receive the cash until after probate, but you can't get probate until IHT is paid!

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Renovate property before Inheritance tax / probate?

Postby AGoodman » Tue Oct 30, 2018 6:57 pm

Ah. The problem is that if the cash is in the bank, the executors cannot get it without probate. Once the executors have it, there is nothing to stop them distributing it.

If the cash is in the bank, and the bank require probate to get it out, they will not release it so the executors can renovate.


Return to “Inheritance Tax, IHT, Trusts & Estates, Capital Taxes”