TXF6 UK

Section B: Q21

Specimen exam

Q21 Section B

2 marks

You should assume that today's date is 15 March 2019.

Opal is aged 71 and has a chargeable estate for inheritance tax (IHT) purposes valued at £950,000.

She owns two properties respectively valued at £374,000 and £442,000.

The first property has an outstanding repayment mortgage of £160,000, and the second property has an outstanding endowment mortgage of £92,000.

Opal owes £22,400 in respect of a personal loan from a bank and she has also verbally promised to pay legal fees of £4,600 incurred by her nephew.

Opal expects the cost of her funeral to be £5,200 and this cost will be covered by the £6,000 that she has invested in an individual savings account (ISA).

Under the terms of her will, Opal has left all of her estate to her children.

Opal’s husband is still alive.

On 14 August 2008, Opal had made a gift of £100,000 to her daughter and on 7 November 2018, she made a gift of £220,000 to her son.

Both these figures are after deducting all available exemptions.

The nil rate band for the tax year 2008-09 is £312,000.

You should assume that both the value of Opal’s estate and the nil rate band will remain unchanged for future years.

What is the net value for the two properties, and related mortgages, which will have been included in the calculation of Opal's chargeable estate of £950,000?

Pick 1 option