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In relation to transfers of value made or treated as made on or after 17 July 2013, IHTA 1984, s 162A(1) disallows as a deduction from a person's estate any liability attributable to financing directly or indirectly the acquisition of excluded property, or the maintenance or enhancement of the value of such property, save so far as deduction of it is permitted by the subsequent subsections of IHTA 1984, s 162A.

For further information on excluded property see I3.254 and Division I9.3.

Deduction of such a liability is permitted as follows.

Firstly, where the excluded property or part of it has been sold for full consideration and the consideration is not excluded property and has not been used to finance excluded property, in which case a deduction is allowed up to the amount of the consideration received¹.

Secondly, where the property has ceased to be excluded property².

Thirdly, where the liability is greater than the value of such of the property in question as has not