Probate/Inheritance Tax Question

[Zeemax_Mini]

Hi guys,

I'm looking at a house for sale at the moment, which is a probate sale. Having never dealt with anything like this, I'm trying to understand a bit more about the process and how it works. The house is up for sale at £850k, so I assume they will have a tax bill of 40%? Will this have been paid already, or is it paid once the property is sold? My main thinking is about an offer I might make - if they're paying 40% tax on the sale of the property, a £100k lower offer would only actually cost them 50%, is that right?

Cheers!

Dom

[Eric Mc]

Inheritance Tax is not based on the "sale" of an asset. It is based on the value of an estate at the date of death of the individual. So, it won't just consist of the value of any land/buildings they owned. It will also include their other assets, such as savings, shares, works of art etc.

Are you connected with the person who owned this property or are you just a potential customer of the property?

[sumo69]

Assuming you are not connected to the person whose house it was, the price you pay has nothing to do with any IHT may be due - it will be an open market value which may be reduced by a few percent depending on how keen the beneficiaries are to get hold of actual cash.

David

[sunoco69]

Further to all the above, IHT is paid PRIOR to probate being granted. It may or may not effect the sale but I would suspect that for you to purchase it and obtain the deeds the probate would of needed to have been granted to release the said deeds. In other words IHT would most likely have been paid already.

[Zeemax_Mini]

Cheers guys.

Assuming it's already been paid on the value of the property (say £850k), my question was really whether if I had an offer of £750k accepted could they claim back the IHT already paid on that extra £100k?

Dom

[sunoco69]

Generally the estate will get a probate valuation and a sale valuation, the former being considerably less than the latter, so I doubt the paid IHT on the £850k value. Most likely the property was valued at around 750-800k for probate.

But all this said give it a go, they can only say no at which point you up the offer.

[knk]

Zeemax_Mini said:

Cheers guys.

Assuming it's already been paid on the value of the property (say £850k), my question was really whether if I had an offer of £750k accepted could they claim back the IHT already paid on that extra £100k?

Dom

Yes, I believe it can be, by the estate.

[Zeemax_Mini]

Cheers guys, it looks like they're probably holding out for a higher offer than I'm prepared to make anyway, but thanks for the advice!

Dom