£45,000 Inheritance Tax?!?

[Cyclone 10]

So what do you think happens when you die? You leave it to someone and you get posthumously prosecuted for it?

Gifting and giving would both be things that happen whilst you're alive.

Maybe you could explain what the problem would be with parent A writing a will to leave their possessions (including half the house) to their child when they die, and parent B writing a similar will.

[willman 10]

So what do you think happens when you die? You leave it to someone and you get posthumously prosecuted for it?

Gifting and giving would both be things that happen whilst you're alive.

Maybe you could explain what the problem would be with parent A writing a will to leave their possessions (including half the house) to their child when they die, and parent B writing a similar will.

 

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.

[max 13]

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.

[cloudybay 17]

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.

 

Totally agree Max. It's not an incentive to work hard. Whilst ever thieving governments of all political persuasions seem hell bent on stealing from those who do work hard yet throw benefits at the feckless, this country will remain unequal. In Dickensian times, money grubbing little Lawyers' invaded the privacy of the poor to value possessions upon death of a family member for the sole aim of the tax grab. Nothing has changed. Probate is a filthy word and one that shouldn't have to be spoken in a civilised society. Children have to sell their family home to pay tax at 40% ? not 5% or 10% but 40%? If a man can leave his wife their home minus inheritance tax, or a civil partner can do the same, why can't I leave mine to the Liberal Party?

[prioryx 10]

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.

[Alex C. 10]

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...

[Longcol 602]

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.

[Cyclone 10]

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.

[Cyclone 10]

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.

[Guest_225 10]

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.

[rach108 10]

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.

[Cyclone 10]

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.