January 22nd, 2016

I’ve inherited a share in a property from my parent, do I need to pay any inheritance tax?



So, you’ve inherited a share in a property from a parent who has died leaving a property with no dependants living in the property and you are wondering what the tax consequences are for you.  There are 3 taxes you need to be aware of – inheritance tax, capital gains tax and income tax.

Inheritance Tax (IHT)

Any IHT should have been paid by the estate in which the property was left.  The estate will be liable to pay IHT at 40% if the total value of the estate is more than £325,000.  You may need to pay Inheritance Tax on any gifts that your parent may have given you in the 7 years preceding death.  A gift can be anything of value (money, property, possessions) or a loss in value when something is transferred eg. if a parent sells a house to a child for less than it is worth.  You may need to pay IHT if the estate can’t pay any tax that is due.  You may have to sell the property to pay the tax.

Capital Gains Tax (CGT)

You don’t have to pay CGT on a property on inheriting it.  However, if the property is sold then you will have to pay CGT at 18% on sale on any increase in value in the property since the date of death.  Each individual person who has a share in the house will have an annual exemption, currently £11,100 that they can set against any gain on sale.

Income Tax (IT)

You don’t have to pay any IT on inheriting a property.  However, if you decide to rent out the property then you will need to include any rental profit (rental income less expenses of rental) on your tax return.  If you don’t already complete a tax return then you will need to notify HMRC of this new source of income.

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Capital Gains Tax Inheritance Tax Tax Info


Alison obtained a First class degree in Accountancy and Management at UCLAN University. She then went on to qualify as a certified accountant in 2006 and became a founder member in 2011.

Alison trained at a practice in Liverpool and, within her 10 years there, she developed as an accounts manager and obtained a varied portfolio of clients which has provided her with a range of experience in accounts, audit, VAT and taxation.
Alison specialises in giving sound jargon-free advice to a range of small and medium sized businesses.

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