prioryx Posted February 16, 2007 Share Posted February 16, 2007 Not bad though, £45k for a £400k house for which you've not paid a penny. I thought that the tax was 40% over 260k if the tax is 45k the house is not 400k. By the way the tax is not just on the house but on all assets. Link to comment Share on other sites More sharing options...
Alex C. Posted February 17, 2007 Share Posted February 17, 2007 I am all for abolishing IHT when the heir lives in the house - no problem whatsoever. If/when you sell the house it should be paid... Link to comment Share on other sites More sharing options...
Longcol Posted February 17, 2007 Share Posted February 17, 2007 I thought that the tax was 40% over 260k if the tax is 45k the house is not 400k. By the way the tax is not just on the house but on all assets. The OP provided the link to the calculator - I think max just used it - I got the same result. Link to comment Share on other sites More sharing options...
Cyclone Posted February 17, 2007 Share Posted February 17, 2007 1.parent a dies - 50% property passes to child/children. child or children use property as collateral and get into debt then loose second property to bailliff. 2. parent dies leaves 50% to child/children -who hate the remaining parent. they then sell their 50% and make them homeless. 3. parent dies and 50% passes to child/children - surviving parent wants to downsize to a bungalow. but they can't without the approval of the children. 4. as above - the house is sold and nets a profit - the child/children is liable to capital gains. do you really need me to carry on explaining what i advise people of every day of the week. as of today all 4 reasons above have happened to either people i know or family of people i know. Yeah, it's good advice, so why shouldn't we want to hear it here? Presumably there are ways to avoid these pitfalls. Covenants in the will of parent A. Capital gains, you'll have to explain that one, it doesn't normally apply when you sell a house. Link to comment Share on other sites More sharing options...
Cyclone Posted February 17, 2007 Share Posted February 17, 2007 Not really an incentive to work hard though is it? Just sit around until your parents die then move into their house. We're all living longer now so I should imagine most people would have made their own way in life and not have to rely on someone dying to get a free roof over their heads. IHT, in my opinion, is just the same as capital gains tax except no-one pays it. On the other hand, there's no incentive to work hard and save anyway since if you leave a large estate the government will take a large portion of it. Link to comment Share on other sites More sharing options...
Guest_225 Posted February 17, 2007 Share Posted February 17, 2007 Yeah, it's good advice, so why shouldn't we want to hear it here? Presumably there are ways to avoid these pitfalls. Covenants in the will of parent A. Capital gains, you'll have to explain that one, it doesn't normally apply when you sell a house. When you sell the property you inherited you have to pay 40% capital gains tax on any profit you made on it over the value it was given at the time of your parents death. So if you value it low for Inheritance Tax you pay more in Capital Gains Tax. They get you either way. Link to comment Share on other sites More sharing options...
rach108 Posted February 17, 2007 Share Posted February 17, 2007 Not bad though, £45k for a £400k house for which you've not paid a penny. I think it's wrong. The parents will have paid tax on the income used to purchase it. Just another way to bleed working people dry. Link to comment Share on other sites More sharing options...
Cyclone Posted February 17, 2007 Share Posted February 17, 2007 When you sell the property you inherited you have to pay 40% capital gains tax on any profit you made on it over the value it was given at the time of your parents death. So if you value it low for Inheritance Tax you pay more in Capital Gains Tax. They get you either way. In which case the fact that you inherit half of the house twice (once from each parent) makes no difference to any capital gains. Except that half of the asset may have appreciated in value since you inherited it. For many people the CG rate will be lower than the inheritance rate anyway, and even if it's not, only the increase in value will be taxed, rather than everything above the IH threshhold. I can't imagine many circumstances where this would ever work out detrimental compared to inheriting a large sum in a single go and pay IH. Link to comment Share on other sites More sharing options...
willman Posted February 17, 2007 Share Posted February 17, 2007 capital gains is 16k i think. so "technically" inheritance and sale will result in a profit. (it's not your place of primary residence) it could also be construed that the sale calls in to play normal taxation as gained income, so this will likely take someone above 40% tax bracket. the detriment is irrelevant it shouldn't apply.imho. but for 500 quid i can save someone 45k in tax, does sound like a bargain? Link to comment Share on other sites More sharing options...
Cyclone Posted February 18, 2007 Share Posted February 18, 2007 Capital gains quite clearly states that it only applies to an inheritance if it appreciates in value from the time it's inheritted. If you sell immediately it is neither counted as income nor as capital increase. It does sound like a bargain, unless someone else is doing it cheaper. Link to comment Share on other sites More sharing options...
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