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Home conversion costs on inheritance tax assessment.
My client’s mother is 80 and living on her own in the family home worth £1.5m. The house is large and could be converted into three flats. The plan is to rent out the top and middle floors and the mother could live on the ground floor with access to the garden. It is estimated that the conversion might cost about £200 000.
We believe that the revenue from renting the top two floors would provide her with a reasonable income which would allow her to obtain home help and thereby permit her to stay in the house for a little longer.
If my client were to lend his mother the money to pay for the conversion could the £200 000 come off the value of the house before inheritance tax is assessed on her death?
I look forward to hearing from Taxation readers.
Query 19 266– Planner.
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