IHT refunds might be due on property sold at loss

Whilst the housing market continues to stagnate, it looks as though there could be some unexpected perks where a property has fallen in value.

Inheritance tax (IHT) is one area of law which remains controversial, particularly where it is the family left behind who are hit with a tax bill.

Thanks to a law change which will fully come into effect from April 2020, the Residence Nil Rate Band will be £175,000. This additional IHT allowance relates to property as long as it passes to a direct descendant. So for married couples, including the nil rate band in the sum of £325,000, will have an IHT allowance of  £1 million  from the tax year 2020/21).

It may seem a large sum, but, for many, this is quickly becoming the norm for property prices in their area – or close to it at least. Plus, as IHT is payable at 40% on all assets above the nil rate band, it’s not surprising to see how many families are feeling cheated out of the inheritance of a much-loved home for many years, that the deceased may have worked hard all their life for.

However, whilst property prices remain relatively low, some IHT paid may be able repayable if the deceased’s property sells for less than the valuation at the date when the deceased passed away. In Oxford, for example, where average property values have declined by around 5.5% in the last two years, there’s a chance that a £1 million house is now worth £945,000. This means the tax due on the property would reduce so the executors can claim a refund of any overpaid IHT from HMRC.

Some experts say that this could be the way for a little while, as the uncertainty of Brexit continues to cloud the market.

If you need advice on the nil rate residence relief and how to claim this, or  think you might have been affected by falling property prices and may be due a refund on previously paid IHT, contact the Private Client team at Downs Solicitors to see how we can help.

More blog posts from this author

Getting a joint account with children will not get around an LPA

Someone approached me recently and said they’d been thinking about some later life planning - always music to my ears. However, this individual said they didn’t feel ready for a Lasting Power of Attorney (LPA) and neither did their son, and asked if a joint bank account would instead provide an alternative solution. On the surface, this seemed acceptable, but from a legal perspective, it could prove to be a minefield.

The Universal fraudsters strike again - but it could be possible to recover assets

Way back in 2018, we reported the case of Universal Wealth - a company owned by Melanie and Steve Long, who faced fraud charges after they set up a scheme designed to avoid paying care fees and simplify the administration of an estate. Instead, all it did was leave people out of pocket.

The Kate Garraway story that brought home the reality of planning ahead

If you were one of many who turned in to Good Morning Britain presenter Kate Garraway's heart-breaking story about her husband's battle with Coronavirus, like me, you were probably sympathising with Kate and admiring her for her honesty. However, I think this has made us think about the need to plan ahead and about our own circumstances and how we would cope in similar circumstances.

More blog posts from this sector

Coronavirus and Sick Pay

As new variants of the coronavirus are emerging and the pandemic continues, employees will continue to take sick leave due to testing positive for the coronavirus and/or being required to self-isolate.

What the new lockdown means for businesses, employees and workers

The third lockdown in England legally came into force on 6 January 2021. How long it will last is uncertain. At least until mid-February and possibly until late March. Vaccination provides a route out of the pandemic, but businesses need to survive this final and possibly longest of the lockdowns.

We are open

During these uncertain times, it is good to know you can count on us.

Even after the recent Government announcement of another national lockdown we remain open for business and are here to help you.

Our Team

Meet all of the team at Downslaw


15A High Street
KT11 3DH

T: 01932 589599
F: 01932 505087

DX: 46102 COBHAM


156 High Street

T: 01306 880110
F: 01306 471230



The Tanners
75 Meadrow

T: 01483 861848
F: 01483 431965