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Where Taxpayers and Advisers Meet

IHT on Land/Property sell

Expat1
Posts:28
Joined:Wed Jan 26, 2022 1:42 pm
IHT on Land/Property sell

Postby Expat1 » Mon May 16, 2022 7:46 pm

Hi, posting for a 60 year old friend who’s partner (not married) passed away suddenly last year and she has inherited a sizeable estate of land etc. she has to pay 40% tax on anything she sells property/land wise. But if she places it into a trust for the family can she reduce her tax on it when selling it?
Appreciate you helping her

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: IHT on Land/Property sell

Postby maths » Mon May 16, 2022 9:06 pm

If she inherited the land from the deceased unmarried partner presumably under his will, then for CGT the b are cost of the land will be its market value at the date of death.

On a subsequent disposal (eg sale) any gain (difference between value at death and sales value) will be subject to CGT at a rate pdf 18%/28% or 10/20% depending upon the nature of the land. Her Arte will. to be 40% (which may well be her marginal income tax rate, not CGT rate).

If she keeps it then on her death it will be revalued and no CGT will be payable when her family inherit it.

Trusts are not always the answer. Trust pay CGT at a rate of 20% or 28%. If she transferred the land into a trust any capital gain could be rolled over (although there may or may not also be a charge to IHT; possibly not). On a subsequent sale by the trustees no tax would be saved compared to if she had sold the land herself. However, having said this, depending upon how many beneficiaries of the family would inherit the land CGT could be saved using a trust.

It all depends upon:

1.type of land
2.value of land
3. how many family members would inherit the land or share in the sale proceeds.
4. what she really (ignoring tax) she wants to do with it.


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