Inheritance tax: residence nil rate band (RNRB)

Crowdedhouse_2

Just wondering if anyone understands how this works?


From my very limited basic understanding it will benefit an individual's direct descendants such as children or grandchildren if they inherit the individual's home or a share of it.


An estate will be entitled to the RNRB if the individual dies on or after 6 April 2017. For tax year 2017 to 2018 it will be £100,000 and then increase each tax year up until 2021.


The bit that I'm confused about is transferring any unused RNRB to the deceased's spouse or civil partner's estate. This can also be done if the first of the couple died before 6 April 2017 even though RNRB wasn't available at that time.


My own situation is that I have lived in my parent's property with them for the past 15 years. They owned their property as tenants in common so when my mother died in 2012 she left her half of the property to me. Therefore my father (still alive) and I now own this property together. When my father dies he will leave his half of the property to me so I will then own it outright.


Am I correct in thinking that I can transfer my mother's unused RNRB to my father's RNRB? So if he died this coming tax year, for instance, it would make a total RNRB of £200,000?


Hope this makes sense to someone.

Keep_pedalling

Yes her full RNRB is transferable to his estate. The amount of her standard nil rate band that can be transfered will be reduced by whatever percentage of her nil rate band she left to you.

Crowdedhouse_2

Thanks for your reply. Could I just ask one further question?


When my cousin (who was not married and no kids) died last year and my aunt (her mother) inherited her house could this RNRB be applied to my cousin's estate or does the backdating only apply to married couples? Thanks.

Keep_pedalling

Crowdedhouse wrote: »

Thanks for your reply. Could I just ask one further question?


When my cousin (who was not married and no kids) died last year and my aunt (her mother) inherited her house could this RNRB be applied to my cousin's estate or does the backdating only apply to married couples? Thanks.

Transfer is only available to married couples or a couple in a civil partnership.

Crowdedhouse_2

Ah, I see, thanks.