Inheritance Tax Relief for Falls in Value - April 2009
With the property market currently suffering from a downturn and the future looking uncertain, there may be some relief for those dealing with the estate of a deceased individual.
When an individual dies, any property in their estate is included for inheritance tax purposes at its market value at the date of death. However, if the property is sold within four years of death for less than its inheritance tax value, the tax liability may be reduced by substituting the lower sale proceeds.
For example, if an individual died in 2006 leaving a property valued at £1 million, the inheritance tax liability (assuming the nil rate band had already been utilised) would be £400,000. In 2009, the property is sold for £900,000. In this situation an election should be made to substitute the lower value thereby reducing the inheritance bill by £40,000.
A similar relief exists in respect of the sale of listed shares or authorised unit trust units within twelve months of the date of death.
To find out more information, please email Barry at barrye@wellsassociates.com
These notes are for guidance only and no liability attaches to this firm or partners due to losses incurred by you in relation to the reliance on the content. It has been written in general terms and is intended as a guide only. Professional advice should be sought regarding your specific situation and the application of the above.