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Can I claim back Inheritance Tax if I sell a property for less?

Posted on 17th July 2020 in Later Life Planning

Posted by

Rachael Morley

Partner & Solicitor
Can I claim back Inheritance Tax if I sell a property for less?

According to a recent report, another result of the Coronavirus pandemic will be falling markets and a decrease in house prices. Which will have an affect not just on those looking to buy and sell their own homes, but also Executors and Administrators of estates for family or friends that have sadly passed.

 

What does this mean for you if you are an Executor or Administrator?

As part of your role as an Executor or Administrator, you will no doubt have obtained a valuation of any land, or buildings, held in the estate at the date of the person’s death. It may be that you are selling, or due to sell, the property in the future, but at a price less than this. Is it fair that the beneficiaries will receive less than the price reported to the Revenue for Inheritance Tax purposes?

As it happens, there is a mechanism for Inheritance Tax which deals precisely with this situation. It is known as ‘loss on sale relief’ and is available to sales of land or buildings by Executors or Administrators within the estate. Provided that the sale takes place within four years of the date of death, at a loss of more than a certain amount compared to the date of death value, it is possible to substitute the sale price for Inheritance Tax purposes.

There are, in fact, similar provisions in place for certain shares, but with a much shorter timescale.

 

How can Tozers help?

Firsty as a note of warning, do take full professional advice if you are considering this step. There are various hoops to jump through and sometimes small changes in the arrangements you have in place may deny you the relief. The facts in play could also, as strange as it seems, actually lead to a higher Inheritance Tax charge.

For any help with estate administration, Inheritance Tax, or being an Executor or Administrator, please visit our dedicated hub page, or contact one of our specialist team directly.

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