With property prices uncertain in the wake of the coronavirus pandemic, larger numbers of families may be looking to make use of loss relief when selling property in a deceased’s estate. At its simplest, inheritance tax is charged at a standard rate of 40 per cent on any part of an estate above £325,000. However, there are various exemptions and reliefs which can impact the tax position, for example leaving an estate to a spouse or charity, and the lesser-known option of securing loss relief.
Inheritance tax is charged on the value of your assets at the date of your death. In a falling market, this can present significant issues; the estate will have paid 40 per cent tax on an asset which might subsequently be worth much less. Fortunately, in certain circumstances, it is possible to reclaim some of the tax paid. In short, on the sale of a property, the sale price can be substituted for the date of death value, meaning that the tax paid should better reflect the reality of the lower property price, and a tax rebate secured. Alice Edwards comments in an article featured in Mortgage Strategy.