IHT - residence NRB

adonis10

Person A has an estate worth £820k, comprised of £650k cash and £170k which is a 1/3 share in a mortgage free property. Their deceased spouse passed on their £325k allowance, taking the total IHT allowance to £650k. The question is how much of the residence NRB would be applicable to person A on death given that they only own 1/3 of a property and they would be passing that on to their daughter, who also owns part of the remaining 2/3?

Tom99

Assuming they live in this house and they also inherited their deceased spouse's RNRB of £125k then 2x£125k=£250k but capped at £170k because that is the value of their share. I would think.

adonis10

Tom99 wrote: »

Assuming they live in this house and they also inherited their deceased spouse's RNRB of £125k then 2x£125k=£250k but capped at £170k because that is the value of their share. I would think.

Would date of death of their spouse have an impact on eligibility to transfer his share of RNRB? If it helps, he passed away in December 2017.

They do live in the house (elderly and so bought into her daughter and son in law’s house, hence the 1/3 split).

I’m assuming the above makes the situation more complex.

getmore4less

Did the wife own any of the property on her death

Was there any life interest or was it passed to the daughter?

adonis10

getmore4less wrote: »

Did the wife own any of the property on her death

Was there any life interest or was it passed to the daughter?

Sorry, should have clairified she is still alive and she wants info on inheritance tax planning (yes, she has been told to speak to an expert but refuses to currently!).

Lives in the property and owns 1/3 share.

Life interest? The whole estate will pass to her daughter, who, with her husband, owns the other 2/3.

Tom99

adonis10 wrote: »

Would date of death of their spouse have an impact on eligibility to transfer his share of RNRB? If it helps, he passed away in December 2017.
They do live in the house (elderly and so bought into her daughter and son in law’s house, hence the 1/3 split).
I’m assuming the above makes the situation more complex.

[FONT=Verdana, sans-serif]Providing the deceased spouse did not use their RNRB then it is transferable, whether they died in 2017 or even 1960 long before the RNRB or the transferable NRB was ever thought of.[/FONT]
[FONT=Verdana, sans-serif]Owning 1/3 makes the valuation aspect a little more complex but since £170k is well within the current £250k RNRB allowance (£350k in 4/2020) it is unlikely to be a problem.[/FONT]

getmore4less

Sorry got them the wrong way round.

Did the husband own any of the house when they died?

adonis10

getmore4less wrote: »

Sorry got them the wrong way round.

Did the husband own any of the house when they died?

Not the current house. They jointly owned a house when he died, she then didn’t wish to live in the house alone therefore moved in with her daughter, sold the house she lived in with her husband and then bought into the house.

getmore4less

That makes it clearer.

adonis10

Any more advice?

Tom99

adonis10 wrote: »

Not the current house. They jointly owned a house when he died, she then didn’t wish to live in the house alone therefore moved in with her daughter, sold the house she lived in with her husband and then bought into the house.

Might the downsizing rules apply? When was the previous house sold, was it on or after 8th July 2015? If the rules apply that may increase the usable RNRB which may be needed if the cash assets exceed £650k

https://www.gov.uk/guidance/how-downsizing-selling-or-gifting-a-home-affects-the-additional-inheritance-tax-threshold#selling-or-giving-away-a-home