Do I pay inheritance tax on my parents' house?
You don't pay it personally — inheritance tax is paid by the estate before you inherit. Whether any is due depends on the whole estate's value against the allowances. A home passing to children can use the £325,000 nil-rate band plus £175,000 residence nil-rate band — up to £500,000 per parent, or £1m for a couple — so many family homes pass with no inheritance tax.
Detailed explanation
The worry about “losing the house to tax” is usually overstated, thanks to the residence allowance.
- The estate (executors) pays any inheritance tax, not the beneficiary.
- A home to direct descendants unlocks the residence nil-rate band.
- A couple can combine allowances to pass on up to £1m tax-free.
- Tax is only due on value above the available bands, at 40%.
A widowed parent leaves a £450,000 home and £50,000 savings to two children. Combined allowances (their own plus their late spouse's transferred bands) far exceed £500,000, so the children inherit with no inheritance tax to pay.
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Sources
- GOV.UK — How Inheritance Tax works: thresholds, rules and allowances
- GOV.UK — Inheritance Tax: residence nil rate band
- HMRC — Inheritance Tax statistics 2024/25
- Reviewed by
- ClearLegacy editorial team
- Last reviewed
- June 2026
- Next review
- December 2026
- Jurisdiction
- England & Wales
Frequently asked questions
Do I pay inheritance tax on my parents' house?
Not personally. Inheritance tax is paid by the estate before you inherit. A home passing to children can use up to £500,000 of allowances per parent (£1m for a couple), so many family homes pass with no inheritance tax.
Will I have to sell the house to pay inheritance tax?
Sometimes the estate must raise funds to pay inheritance tax, which can mean selling assets. Tax on property can often be paid in instalments over up to ten years, which can avoid a forced quick sale.
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