Inheriting a property with a "tenant"
Discussion
If you inherited your divorced mother's property but with a condition that her surviving partner (not married to) can continue to live there until he dies, how does this affect the value of the estate?
Am I right in thinking the house is included in the valuation of the total estate even though nothing can be done with it in terms of selling or renting as the surviving partner has been given the right to live there indefinately.
I see on the thieving bast...sorry, HMRC website that it's possible to pay IHT over a period of 10 years if some(?) of the estate is tied up in property, would that apply to this situation as the asset cannot be sold atm?
Am I right in thinking the house is included in the valuation of the total estate even though nothing can be done with it in terms of selling or renting as the surviving partner has been given the right to live there indefinately.
I see on the thieving bast...sorry, HMRC website that it's possible to pay IHT over a period of 10 years if some(?) of the estate is tied up in property, would that apply to this situation as the asset cannot be sold atm?
Just thinking aloud (Tax accountant please confirm)....
Can you get a surveyor to value the property with the tenant in situ for a nominal term (10 years), effectively valueing the reversionary interest in the FH?
This may get you a lower value to declare now? and would also represent it's true current value.
Can you get a surveyor to value the property with the tenant in situ for a nominal term (10 years), effectively valueing the reversionary interest in the FH?
This may get you a lower value to declare now? and would also represent it's true current value.
PurpleMoonlight said:
I'm not an expert, but I would say that the value of the property for IHT purposes would be the market value with a sitting lifetime rent free tenant, that is a lot less than the value with vacant posession.
I sure hope you're right. Infinite virtual beers for you if this turns out to be the case! 
Pessimist in me says no, especially as the solicitor dealing with the will didn't mention it.
Me too, but if that's what's in the will then how else could/should it be played?
I'm sure HMRC have got it sewn up but as I see it they would effectively have to force the tenant out, against the will (which is legally binding, no?), to enable the house to be sold for it's full market value?
BTW, the tenant also doesn't have to pay rent.
I'm sure HMRC have got it sewn up but as I see it they would effectively have to force the tenant out, against the will (which is legally binding, no?), to enable the house to be sold for it's full market value?
BTW, the tenant also doesn't have to pay rent.
This is HMRC guidance.
http://www.hmrc.gov.uk/inheritancetax/how-to-value...
"Getting a realistic valuation for a property's market value
You should ask the valuer to provide a realistic price of a property's market value - the 'open market' value. The valuation should take into account anything that might increase or reduce the value of the property and you should ask the valuer to do this. See more in the sections below.
If you end up with a range of different values it's usually best to use a valuation in the middle of the range."
The right of someone to occupy rent free for life will seriously affect the value.
http://www.hmrc.gov.uk/inheritancetax/how-to-value...
"Getting a realistic valuation for a property's market value
You should ask the valuer to provide a realistic price of a property's market value - the 'open market' value. The valuation should take into account anything that might increase or reduce the value of the property and you should ask the valuer to do this. See more in the sections below.
If you end up with a range of different values it's usually best to use a valuation in the middle of the range."
The right of someone to occupy rent free for life will seriously affect the value.
Edited by PurpleMoonlight on Friday 3rd May 17:22
Centurion07 said:
Do we think it would make a difference if the tenant is one of the two trustees of the house, named in the will?
Is the house held in a trust now?I've got a feeling, but for God's sake take proper advice on this, that nothing happens to the property until the current occupier dies.
ETA: There's some information here: http://www.greenwoods.co.uk/knowledge-base/private...
Edited by Deva Link on Friday 3rd May 18:30
PurpleMoonlight said:
This is HMRC guidance....
The right of someone to occupy rent free for life will seriously affect the value.
The right of someone to occupy rent free for life will seriously affect the value.
PurpleMoonlight said:
What has that got to do with the value of the property for IHT?
The length of time the life tenant is expected to remain in the property will have a bearing as to its value, and the tax due.User33678888 said:
PurpleMoonlight said:
This is HMRC guidance....
The right of someone to occupy rent free for life will seriously affect the value.
The right of someone to occupy rent free for life will seriously affect the value.
PurpleMoonlight said:
What has that got to do with the value of the property for IHT?
The length of time the life tenant is expected to remain in the property will have a bearing as to its value, and the tax due.Deva Link said:
Centurion07 said:
Do we think it would make a difference if the tenant is one of the two trustees of the house, named in the will?
Is the house held in a trust now?I've got a feeling, but for God's sake take proper advice on this, that nothing happens to the property until the current occupier dies.
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