Calculation of Inheritance tax

[Joeldov]

My family have a house which has been converted into 4 studio flats and 2 one bedroom flats.

We have received planning permission to develop the loft into another unit.
This has been granted for a period of 3 years (however this is not a possibility or a number of reasons)
so are considering selling the roof rights to our managing agent)

I think this is a mistake and should hang on to the roof and one day in the future develop it ourselves or sell it but not now.

My questions are:

1) Do the tax authorities take into account when calculating IHT potential for development of a house be it developing a roof or building a rear extension?

2) As far as I know houses in the UK generally have lofts, so even though they may be of value to the house owner, do the tax authorities calculate a loft in how much a property is worth?



3) if they do I assume if we sell the roof rights to someone, that should bring down any Inheritance tax that would have to be paid on the house?

4) Would someone owning the loft extension(a flat) bring down the value of the 6 units we own?

5) it doesn’t seem logical to me that the tax authorities would
count any “*potential*” to carry out further building on a property if they decided to dispute our estimation of its value
Would this bev the case or not?

If this is the case, do I not need to consider selling the roof rights to someone who would wish to build a flat above our 6 units
to make the value less and avoid paying more IHT.

6) If the flat in the roof belongs to someone else does it make the property as a whole less valuable?

When the owner passes away, do I assume
the heirs employ a Charteresd Surveyor to give a valuation?

If the tax authorities think the surveyors valuation is about right they acccept the price and take 40% above the threshold

In a case where they think the property is worth more do they then send in their own Surveyor.

Can the heirs dispute that valuation?

Another advice, suggestions very much appreciated.

Thank you!

 

[Longterminvestor]

For what it is worth:-

1) Do the tax authorities take into account when calculating IHT potential for development of a house be it developing a roof or building a rear extension?
COMMENT: They will base this on market value with planning permission

2) As far as I know houses in the UK generally have lofts, so even though they may be of value to the house owner, do the tax authorities calculate a loft in how much a property is worth?
COMMENT: The will value the whole property.

3) if they do I assume if we sell the roof rights to someone, that should bring down any Inheritance tax that would have to be paid on the house?
COMMENT: IHT is calculated on the whole estate, not just the property. So if the rights were sold and funds retained surely they would be part of the estate?

4) Would someone owning the loft extension(a flat) bring down the value of the 6 units we own?
COMMENT: It depends on right entry, right of way, etc.

5) it doesn’t seem logical to me that the tax authorities would
count any “*potential*” to carry out further building on a property if they decided to dispute our estimation of its value. Would this bev the case or not?
COMMENT: They will value the property as it stands which would include any value on planning permission.

If this is the case, do I not need to consider selling the roof rights to someone who would wish to build a flat above our 6 units
to make the value less and avoid paying more IHT.
COMMENT: Why would you want to reduce the long term value of the property?

6) If the flat in the roof belongs to someone else does it make the property as a whole less valuable?
COMMENT: It depends on right entry, right of way, etc.

I think you need to take legal advice.

 

[diyhelp]

This all seems very complicated - I think you need to take professional advice about maximising the value of the property whole mitigating IHT. Not easy by the looks of things!