When someone dies, their property, money and possessions can be taxed depending on the value of the person’s assets. If a person’s assets surpass a certain threshold, people due to inherit someone’s estate could potentially lose swathes of money to inheritance tax. Here’s how you can calculate how much your house is worth.
What are inheritance tax rates?
There won’t usually be any inheritance tax if an estate is valued at below £325,000.
This also means if you leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club, there is usually no inheritance tax to pay.
If you are planning to give your home away to any children or grandchildren, your inheritance tax threshold can increase to £500,000.
On the part of your estate which is above the threshold, the standard inheritance tax rate is 40 percent.
Your estate could have a reduced rate of 36 percent if you leave 10 percent or more of the ‘net value’ to charity, but this will only apply to certain assets.
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How do you calculate the value of someone’s estate?
When someone dies, whoever is the executor or administrator of the person’s will has to apply for probate.
When applying for probate, it will be up to the executors of the will to value the estate of the person who has died.
This means calculating how much money the person who died had in cash, plus the value of any property and possessions they have left behind.
According to the Government website, the executor of the will has to contact organisations such as banks and utility providers.
These organisations need to be contacted to determine the assets and debts the deceased had.
When calculating the value of the estate, it refers to the ‘gross’ value of the estate.
The calculation must also include any ‘gifts’ – certain assets given away in the seven years before the person’s death.
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All assets, including possessions such as property, jewellery and cars, must be included in the estimate.
The value of the estate must then be reported to HMRC.
The process of valuing an estate can take a while, sometimes in excess of nine months for larger estates.
Further details on what must be included in evaluations of a person’s estate are included on the Government website.
How much is my house worth?
While a person is alive, there are ways of finding out how much the house they own is worth.
Property websites can give you an estimate of what your house is worth, and you can use the Land Registry’s calculator to find out an estimate of how the price of your home has changed since it was last bought.
If a person has died, and people inheriting the estate need to find out how much a house is worth, there are professionals who can help with this.
You can pay a solicitor to help you process the valuation of the estate.
Money Advice Service also has guidance on when and how to hire a professional to help with this issue HERE.
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