As with the whole tax system, the Government keep the effect of falling house prices on the ability of families to meet inheritance tax liabilities under review.
The Government therefore have two measures in place to address this eventuality of falling house prices affecting the ability to meet inheritance tax liabilities:
While a house remains unsold, the inheritance tax due on it can be paid in instalments for up to 10 years.
Where a house is sold within four years of the death for less than the value on which inheritance tax was paid, the personal representatives can in most cases make a claim for inheritance tax ‘loss on sale’ relief. The loss on sale relief does not apply if the sale is to a beneficiary or relative of a beneficiary. This is because of the risk of avoidance.