Inheriting a property, or part of it, should be a welcome piece of financial news in the current or indeed any economic climate.
However, the current credit crunch and the slowing down of the property market has increased the stress on families as they face the prospect of paying all the inheritance tax (IHT) due on an estate BEFORE the house is sold.
The property is generally the largest if not the only asset in an estate and therefore until it is sold there are no funds “available within the estate” to fund the IHT bill. Following the introduction of transferable allowances the Government is expecting the overall IHT collected to fall from £4 billion last year to £3 billion this year. The bulk of this, ie £2billion is estimated to relate to inherited property. It is therefore important money for the HMRC to secure for the coffers.
There has been recent rumblings in the press that there is a tough new stance by probate valuers at HM Revenue & Customs (HMRC) implying grieving families are wrestling with large IHT bills based on properties which they have no immediate prospect of selling.
The probate system can be fraught with difficulty and delay particularly when the deceased died intestate (without a will). What isn’t slow is the demand for the IHT bill to be paid. This falls due within a few months. A property cannot be put up for sale until probate is granted. This could take over a year particularly in the cases of intestate estates. Thereafter, it is currently unlikely that “a quick sale” of the property will occur on the open market. There are not many true property cash buyers around.
Options worth considering include:
- Short term loans taken out by the family – This has the implications of paying significant interest payments per month until it is settled.
- Plundering Savings – For those lucky enough to be in a situation to do so, savings can be used to clear or at least reduce the amount owed.
- Alternatively, professional advisers may be able to organise to have money released from any bank accounts within the estate in advance of a grant of probate
- Finally, if there are any shares in the estate these could be sold and the cash used to settle some of the the tax early.
IHT is calculated on the value of the entire estate. In the current climate the “market value” of the property is difficult to establish. With prices falling rapidly many families may end up paying IHT upfront on a property which ends up being worth significantly less than the original estimate. Sure the monies can be recovered by the executors by seeking a revision of the original estimate but this involves more delay, cost and negotiation…
In most cases family bereavement causes grief and the administation of the estate involves a lot of organisation, hassle and stress on top of the usual turmoil of the actual house sale. To secure a quick sale for a property that you have recently inherited contact Molae Properties
Molae Properties are specialist property cash buyers. Our clients situations range from those who have inherited property to those that are relocating or simply in need of a quick and guaranteed sale. We can offer flexible terms to suit your needs and have experience of dealing with inherited property.
Visit our testimonials page and the FAQs to see how our service works.
Call freephone number 0800 634 5892 to discuss how we can help you without obligation.