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19 October 2016
Are rent arrears an asset of the deceased taxpayer’s estate and what are the tax implications?
We act for the executors of an estate containing various rental properties. One of the tenants had been in substantial arrears with rents before the date of death of the landlord who had in effect written off ever receiving the rents before his death. The arrears of rent were not included as an asset of the estate for inheritance tax purposes.
During the administration period and some two years after the death the rent arrears were paid. These have been included in the estate returns and taxed as income but could HMRC argue that the inheritance tax calculations are incorrect on the basis that the rent arrears were in fact an asset of the estate?
I hope Taxation readers are able to clarify matters.
Query 18...
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