Where, within four years of the date of the deceased’s death, a property in their estate is sold at open market value for less than probate value, you can make a claim to recalculate the inheritance tax using the sale value instead.
Conditions
A number of conditions must be satisfied:
Other situations
Although HMRC may try to object, there’s nothing specific in the legislation to disallow a claim to be made, even where the property was sold for more than the probate value. This would reduce the combined Inheritance Tax and capital gains tax bill on the property where the rate of the former is lower than the latter. One situation in which this applies is where the property in question is subject to 50% business property relief. The effective rate of IHT is this instance is 20% while CGT might be payable at up to 28%.
Use our IHT Claim for Fall in Value Relief for Land and Buildings to save time and ensure you include all the information HMRC needs to process your claim. Alternatively, you can use HMRC’s Form IHT38 (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/373493/IHT38.pdf).