Fresh IHT risk for new home buyers
With house prices set to rise by up to 20% this year, the Chartered Institute of Taxation is once again warning homebuyers of the inheritance tax risks.
According to the CIOT, even purchasing an average-priced house could put you in into the inheritance tax bracket – currently at 40% for houses costing £250,000 or more.
This is because the threshold for paying the levy has risen at a slower rate then general housing prices, with the average home expected to cost £330,000 in 2020.
According to the Royal Chartered Institute of Surveyors, 10% of houses in London and the South East will cost more than £250,000 by 2012 meaning those that inherit a house in the future could face a tax bill of 40% of the value.
John Whiting of the CIOT said the heirs of ‘Mr & Mrs Average will be faced with selling the family home to meet the IHT bill and ‘have a smaller nest egg as a consequence.
He asked: ‘One has to question whether the tax was intended to reach everyone. IHT planning is always possible, but is the tax hitting the right target?’