Western Mail Property Doctor Column #22
By admin
Issued on behalf of Emyr Pierce Solicitors
My widowed father, who died five weeks ago, has made me the sole beneficiary in his will, which includes the family home worth around £450,000. Bearing in mind last week’s confirmation by the government to double the limit of Inheritance Tax to £600,000, will I now escape this tax?
Every individual has an Inheritance Tax allowance of £300,000 and while surviving spouses can be left a sum in excess of this allowance as the surviving spouse is exempt from Inheritance Tax, the problem – up until now – has been that on the death of the second spouse all assets over the sum of £300,000 would be taxed at the rate of 40 per cent. The new proposals – confirmed in last week’s Queen’s Speech and effective from October 9 – mean that so long as the first spouse to die didn’t take advantage of his/her allowance (in other words everything passed to the husband/wife) then the estate of the surviving spouse can retrospectively claim the allowance of the first deceased spouse on the death of the surviving spouse. So in this case, provided the widower died after October 9 and his wife’s estate had not claimed the benefit of her individual allowance on her death, the son would no longer have to pay any Inheritance Tax on his father’s estate provided the estate did not exceed £600,000. The recent tax change just adds a new exemption for married couples or those in Civil Partnerships who leave everything to each other and who subsequently leave assets to their children. The exemption does not affect divorced couples or partners who live together but are not married. So an unmarried couple who leave their assets to their children will not have the benefit of this recent Inheritance Tax change and the full extent of the benefits claimed by the government are limited to married couples and couples in a Civil Partnership only. In all other cases the effect of passing all your assets to your partner may lead to serious tax charges on the death of the survivor as the survivor will only be able to claim the individual tax allowance (currently £300,000) on his or her death and any excess over £300,000 will be taxed at 40 per cent. Even married couples to qualify for this retrospective additional allowance will have to leave their assets to their children to take advantage of the first deceased spouse’s allowance. So, as in the case prior to October 9, if a surviving spouse dies and has no children then his/her estate would still be taxed at 40 per cent on all assets over £300,000.
I’m buying a property that was built in the 1960s. Should I check the condition of the central heating?
Yes. Other than the structure, the central heating system is the most expensive component in any property and the principle of ‘let the buyer beware’ applies to everything. My advice is to always check the central heating system before you exchange contracts. After all, you wouldn’t dream of buying a house without having proper building survey carried out, so why leave the central heating system to chance? If it has to be replaced, and once you move in you discover that there is something seriously wrong with the system, it could cost you a couple of thousand pounds to repair or replace it. So always get it checked out before contracts are exchanged and then, if there’s something wrong, you are at least in a position to renegotiate the price of the property. Once contracts have been exchanged and you discover there is a problem, it’s too late to complain and you have bought the property as it stands.
