Tax relief on IHT interest payable to HMRC on an inherited property that is rented.

Tax relief on IHT interest payable to HMRC on...

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Where a property is inherited and interest payments for IHT are being made to HMRC, (via the 10 year instalments), is the interest payable to HMRC deductible against the property income for SA?  The outstanding tax is only against  the property,  all other IHT tax on cash and assets has been paid.

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By Paul Soper
29th Apr 2013 18:48

No and then again...

'fraid not - it doesn't qualify as a deduction in calculating property income as it is not incurred wholly and exclusively for the purpose of the trade, even if an amount was separately borrowed and used to pay the IHT due it would still not be for the purpose of the rental business.  However if the owners decided to extract their own capital from the business and borrowed to replace that, that would be allowable and the funds freed could be used to repay the IHT.  The interest on IHT is 3% of course, probably a lot less than any interest payable on a refinance.

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