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Inheritance Tax and Property: What Homeowners and Investors Should Know

Rising property values pull more estates into IHT.

Inheritance Tax and Property: What Homeowners and Investors Should Know Property Investment & Wealth Building

Updated October 2026 · Fraser Bond

Tax · Inheritance

IHT and property

£325knil-rate band
£175kresidence band
40%above
7-yeargifts
In short: Inheritance Tax is charged at 40% on estates above the tax-free thresholds. Everyone has a £325,000 nil-rate band, plus a £175,000 residence nil-rate band when a home passes to children or grandchildren, though this tapers away for estates over £2 million. Unused allowances can pass to a surviving spouse or civil partner, so a couple may leave up to £1 million tax-free. Thresholds are frozen until 2030, so rising London prices bring more families into IHT. Gifts are usually outside the estate after seven years, but if you keep living in a gifted home rent-free, it isn't. Take specialist advice.

Frequently asked questions

Is the family home exempt?

No, but the residence nil-rate band helps.

Can I give my house to my children?

Yes, but gifts with reservation don't work for IHT.

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