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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Loss on sale of land: outline of the relief

Under IHTA84/S191 (1), sale of land relief may be claimed when

  • the ‘appropriate person’ (IHTM33050) (most commonly the executors)
  • sells ‘an interest in land’ (IHTM33061) included in the deceased’s estate
  • within four years of the death (which may be extended in the case of compulsory purchases (IHTM33091). Sales at a loss only in the fourth year after death are treated as sales within the 3-year period, IHTA84/S197A (IHTM33074).
  • for a value different to its date of death value.

When this happens, the appropriate person may claim that the ‘sale value’ (IHTM33073) should be substituted for the ‘value on the death’ (IHTM33100).

Where the only interest in land included in a deceased’s estate is the residence, the relief is normally straightforward.


Terry died in August 2006. His house was valued for probate at £300,000. He had no other interests in land.

In December 2008, Terry’s executors sold the house at arm’s length to a complete stranger for £250,000.

The executors claimed relief under IHTA84/S191 (1). The date of death value of the house for IHT purposes was reduced to £250,000.

But once the relief is claimed, the sale price of all interests in land sold within the 4 year period (IHTM33090) must be substituted for their date of death value. This includes those interests sold for more than the date of date of death value. The exception is property sold for a higher price in the fourth year, as above.

There are situations where the sale price must be adjusted (IHTM33111) to take account of special circumstances.

The relief is not available where

  • the difference between the date of death value and the sale price is less than £1,000 or 5% of the value on death (IHTM33083), whichever is the lower, (IHTA84/S191(2)) or
  • the sale is a non-qualifying sale (IHTM33081), as defined by IHTA84/S191 (3)
  • where the only sale is of an interest whose value on death is covered by agricultural or business relief (or both) at 100% (IHTM33026).