Liabilities: investigating liabilities: mortgages
Full details of the mortgages and secured loans should be included on the IHT400 at box 80.
You should generally accept the deduction as claimed. But you should bear the following in mind:
- a mortgage is deductible firstly from the property against which it is charged
- a mortgage charged on exempt property, for example a house that is being left to the deceased’s spouse or civil partner (IHTM11032), cannot be deducted against chargeable property
- when a debt is charged on several properties it should be apportioned between them.
The IHT400 notes tell taxpayers to include details of any mortgage protection policies in box 57. This means that unless there is evidence to suggest that a policy has been omitted from the account there is normally no need to ask taxpayers to confirm whether the deceased had a policy.
It is possible that the mortgage is not connected with the purchase of a property. You should consider the information you have on the deceased and consider why the mortgage was taken out. For example it is unusual for the elderly or retired to take out mortgages to buy a house for themselves. If the reasons are not clear and the amount of tax at stake is substantial you may consider asking the taxpayers what was the purpose of the mortgage and whether, if appropriate, it has been reflected elsewhere in the estate.