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Where Taxpayers and Advisers Meet

Selling a house to pay IHT

APOEstate
Posts:2
Joined:Mon Nov 01, 2021 6:13 pm
Selling a house to pay IHT

Postby APOEstate » Mon Nov 01, 2021 6:56 pm

I would appreciate some guidance on the following :-

I am a retired single person - no children - so the only relief on my estate for IHT purposes is only £325k.

My sister is one of my Executors in my Will.

When I pass away , there will be a large IHT bill to be paid due to the value of my property. ( Say £140k. of IHT)

My sister doe not have £140k !!

I know that some IHT has to be paid within 6 months of my death ( which could be paid by my sister ).

My question is :- Can the house be sold a.s.a.p in order to raise the funds to pay the remaining IHT ?

AGoodman
Posts:1419
Joined:Fri May 16, 2014 3:47 pm

Re: Selling a house to pay IHT

Postby AGoodman » Tue Nov 02, 2021 1:28 pm

No the house can't be sold. However, any IHT relating to land (such as the house) can be paid in 10 annual instalments - only the first instalment has to be paid to obtain probate - i.e. a tenth of the IHT.

pawncob
Posts:4879
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Selling a house to pay IHT

Postby pawncob » Tue Nov 02, 2021 4:28 pm

@AGoodman. Why can't the house be sold?
With a pinch of salt take what I say, but don't exceed your RDA

maths
Posts:8430
Joined:Wed Aug 06, 2008 3:25 pm

Re: Selling a house to pay IHT

Postby maths » Tue Nov 02, 2021 8:30 pm

Not quite sure what AG is referring to.\

The executor is responsible for discharging any IHT due on the deceased's estate. If effectively the only asset in the estate is the house then then executor can sell it to raise the monies to discharge the IHT.

AGoodman
Posts:1419
Joined:Fri May 16, 2014 3:47 pm

Re: Selling a house to pay IHT

Postby AGoodman » Wed Nov 03, 2021 12:08 pm

Ignore me. I misread the question and thought OP was wishing to sell the property prior to probate.

Yes, if the house has to be sold, then the house can be sold (this is really a legal rather than tax question but the answer is the same).

There wouldn't be any desperate rush as your sister would have a year before the second (10%) instalment has to be paid. Once sold, the balance of the IHT has to be paid (i.e. the instalment option is lost).

APOEstate
Posts:2
Joined:Mon Nov 01, 2021 6:13 pm

Re: Selling a house to pay IHT

Postby APOEstate » Thu Nov 04, 2021 4:09 pm

Thank you very much for clarifying this point.

When I researched the HMRC website for IHT purposes it did not give me any clear answers to my original question - so I can now stop worrying about bridging loans and various Life Assurance schemes in order to pay the IHT.

Myself and my sister are much relieved - thank you again.

Fasteddie
Posts:1
Joined:Fri Nov 05, 2021 12:21 pm

Re: Selling a house to pay IHT

Postby Fasteddie » Fri Nov 05, 2021 12:26 pm

The reason for the confusion was that AG was meaning the house can't be sold until probate is issued and probate isn't issued until the IHT is paid, the old catch22 IHT conundrum which, as stated, can be solved by choosing to pay in instalments on the IHT400 form, meaning only one 10% instalment of IHT needs to be paid to get probate, after which the rest can be paid once the house is sold.


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