London house prices have dropped so much in value over the past year that anyone who has inherited a property may be due an inheritance tax refund. This all depends on whether a certain trigger point is reached but HMRC (unsurprisingly) will not tell you if this has happened. Although the legislation does not set out a specific trigger point, HMRC’s form states that this is a fall of at least 5% in the property price or £1,000 (whichever is lower) in the four years after the former owner’s death.
Significantly London house prices are running well ahead of this trigger point. The latest official data from the Land Registry shows house prices in the capital dropped 4.4% in the year to the end of May 2019.
A year ago, the average house was valued at £478,485. Now, the same property is estimated to be worth £457,451. The difference in IHT charged at 40% on the value of an average property is therefore £21,034 and any reclaims would also enjoy interest!