If you inherit property, you are usually not liable to pay tax on the inheritance you receive. This is because any Inheritance Tax (IHT) due should be paid out of the deceased’s estate before any cash or assets are distributed to the estate beneficiaries.
The rate of IHT currently payable is 40% on death and 20% on lifetime gifts. IHT is payable at a reduced rate on some assets if an individual leaves 10% or more of the 'net value' of their estate to a charity.
If you inherit a property, you are generally not liable for Stamp Duty, Income Tax or Capital Gains Tax and HMRC would make contact if you had IHT to pay.
If you receive an inheritance, you will be liable to Income Tax on any profit or gains received or earned after the inheritance. For example, Capital Gains Tax (CGT) on any increase in property value if you dispose of the property after the date of inheritance or tax on any rental income received. If inheriting a property means you then own two properties, you must tell HMRC which property is your main home within two years. There are special rules if the property is held in trust.
The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.
The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.
Share this article