• frog 🐸@beehaw.org
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    1 year ago

    Are the limits determined by the whole value of the estate, or the value passed to each descendent? If the former, I can see how even a semi-decent house could pass the £375k threshold. But if the latter, once the estate has been split between multiple children and/or grandchildren, very few recipients are going to be hitting £375k from half a house.

      • frog 🐸@beehaw.org
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        1 year ago

        Yeah, I concur that it’s on the value of the estate of the person who died.

        But there is also this: “The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold.”

        And given the threshold rises to £500k when it’s between direct family (parent to child, etc), and you’re only paying on the value above the threshold… you have to inherit a pretty big house from your parents to even have to pay inheritance tax. Say it was a £550k house, so there’s tax to pay on the £50k over half a million. 40% of that comes out to £20k, which sure, is a lot of money… but getting a little £20k mortgage on that massive £550k house you just inherited would absolutely be viable. I think the overlap of people with family wealthy enough to have £500k+ houses, but who themselves are so low paid and have such a low credit score that a tiny mortgage is literally impossible, is really, really low. Like there could be a few edge cases, but I’d be willing to bet the majority of people who are in a position to inherit a £550k house are also in a position where a £20k mortgage would not be hard to arrange, especially given they now have a high value asset to secure the mortgage against.

        • Syldon@feddit.ukOP
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          1 year ago

          There won’t be many banks who would not mortgage a £550 asset for £20k.

          • frog 🐸@beehaw.org
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            1 year ago

            Exactly. You’d have to be really, really untrustworthy, with an appalling credit score and no income, and probably a criminal record for fraud, before a bank wouldn’t do that mortgage. So paying inheritance tax on a high value asset isn’t impossible if you don’t have the actual cash in the bank at the time of your relative’s death.