Low interest rates continue to make property an attractive investment proposition, while falling house prices across many parts of the UK have sounded a warning bell and created a less positive landscape.
Add to that the uncertainty around Brexit and a political stalemate with many policy decisions on hold, and the outlook is even more uncertain. As the old saying goes: ‘caveat emptor’, let the buyer beware.
The need for impartial mortgage and financial advice has never been greater, which combined with careful planning can help mitigate the risks.
One example of such a risk is a recent report which states that falling prices may lead to an increase in inheritance tax rebates if a property that was included in the deceased’s estate is sold at a loss within four years of death.
Inheritance tax is currently charged at 40 per cent on anything above the £325,000 threshold, and with falling house prices this could mean that beneficiaries are taxed on a diminishing asset.
As TC Group’s Georgie Eykel points out, this could affect many people, particularly in the South and South East:
‘We know from recently released figures that 28,100 estates paid inheritance tax in 2016 and 2017 – a record number which represents a 15 per cent increase on the previous year.
‘The average deduction was £179,000 and total duties raised as a result also reached a new high of £5.4 billion in 2018. Over half of the estates paying inheritance tax are in London and the South East, and those affected should make sure that they’re not paying out more than they should in tax.’
From 2020 the threshold will be increased to £500,000 if a family home is left to any children, including adopted, foster or step-children, or grandchildren.
The uncertain economic and political climate also means that anyone buying or selling a house should seek the best possible independent advice.
Comments Sam Naylor, TC’s Head of Mortgage & Protection: ‘House buyers, whether first time or those seeking investment properties, need to proceed with caution and have access to the widest range of relevant information and advice before committing.’
TC Group is uniquely placed as a business to provide advice covering not only mortgages and investment planning, but aspects such as tax liability and legal services.
For further information and professional advice please see how we can help with mortgages and investments, and Wills and Inheritance Tax Planning.