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UK Property Tax Portal
UK Property Tax Q&A
What is my inheritance tax liability?
Question
If you inherit a property valued at £40000 and which has an outstanding mortgage of £320,000. Are you still liable for IHT on value over £263000? Even though there is only capital of £60K in it. Arthur Says Inheritance tax is due on the net value of the estate. So if the only two items attributable to the estate are a property valued at £400,000 (not £40,000) and an outstanding mortgage of £320,000, then the net value of the estate is £80,000. Since this is below £263,000 (or whatever the nil rate band at the time was), there is no IHT.
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