The inheritance tax on property is one of the prime culprits for an increasing number of UK citizens finding that their estates will be subject to taxation on their deaths. As house prices continue to rise, so too does the value of many homeowners estates, and this in turn increases the likelihood that they will exceed the inheritance tax threshold.
There is no specific inheritance tax levied just on property – rather, the value of the property is included as part of the overall value of the taxable estate. Whether or not there will be tax to pay depends on the following:
- The nil-rate band is £312,000. The value of the estate up to this amount is free from tax.
- Excess value over this band is subject to a 40% tax rate.
- Gifts and asset transfers from the seven years leading up to death can also be subject to inheritance tax.
- There are various exemptions, reservations and conditions that can further affect the value of the estate.
Property is a significant part of many estates, and the manner in which it is owned can affect whether inheritance tax will be paid – for instance, joint tenants or tenants in common will have different options available should one of the couple pass away.
For information and advice on inheritance tax on property, you can use our online form to be put in contact with qualified experts who are offering a no-obligations first consultation for free.