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Thomas
Thomas, Lawyer
Category: UK Property Law
Satisfied Customers: 7481
Experience:  BA (Hons), PgDip, Practising Solicitor
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my dad sold his house 4 yrs ago and split the proceeds 3 ways..my

Resolved Question:

my dad sold his house 4 yrs ago and split the proceeds 3 ways..my brother, myself and him..hoping to escape the inheritance tax death trap, unfortunately he has recentely died and the solicitor dealing with our probate has said that due to his leasehold interest on said property that our estate between me and my brother could go beyond the 325,000 band...can you explain what the solicitor meant by 'leasehold interest' and also if there is any way to escape in paying off such a huge tax bill
Submitted: 5 years ago.
Category: UK Property Law
Expert:  Thomas replied 5 years ago.

Hi

Thanks for your question.

To enable me to answer your question could you please respond to the following:-

  • 1. Was the "house" you refer to actually a flat?

Kind regards.

Tom

Customer: replied 5 years ago.
was a masionette ..a 2 up 2 down in nw london
Expert:  Thomas replied 5 years ago.

Hi,

 

Thanks for your Question.

 

When you buy a stand alone house (eg. Terraced, semi-detached, detached) then interest that you buy is called a freehold interest. When you buy a flat/maisonette the interest that you buy is called a leasehold interest. This is a long version of a lease (eg. 99 or 999 years) and what your father owned.


When you solicitor refers to "leasehold interest" he is referring to the maisonette and the money he received from the sale. He is probably saying that the estate is over £325, 000.00 because the gift of monies from the sale to you and your brother are potentially exempt transfer for inheritance tax purposes, which means that either the whole or a percentage of the monies he gave to you will actually be included in his estate for IHT purposes and calculating the IHT tax liability on the estate.

 

If the gift of money was made to you more than 3 years ago then the amount included in your father's estate will be reduced by a percentage depending on exactly how long ago the gift occurred.

 

If this is the case then there is no getting around the rules now that your father has passed away I'm afraid. Your solicitor will explain in detail to you I should have thought.

 

If this has been useful please kindly click accept so that I may be rewarded for my time. It will be gratefully received and you will be free to ask follow up questions.

Kind regards,


Tom

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