IHT - residence NRB

getmore4less

Is she also struggling to spend income?

adonis10

getmore4less wrote: »

Is she also struggling to spend income?

Yes, massively. Spends about 5-10% of monthly income which isn’t a small amount so that is building at a rate as well.

Keep_pedalling

adonis10 wrote: »

Yes, massively. Spends about 5-10% of monthly income which isn’t a small amount so that is building at a rate as well.

Well if she refuses to gift that then she just has to accept that the potential IHT on her estate will continue to grow unless she has to start spending on care costs. On a positive note if required she will be able to afford the best care available.

getmore4less

Buy more of the house she lives in off the daughter to get a bit closer to the full RNRB.

Then regular gifts from income to stop the estate growing.

adonis10

getmore4less wrote: »

Buy more of the house she lives in off the daughter

To increase the potential RNRB allowance? Haven’t established if her current holding of 1/3 means that the allowance is reduced proportionately.

getmore4less

adonis10 wrote: »

To increase the potential RNRB allowance? Haven’t established if her current holding of 1/3 means that the allowance is reduced proportionately.

Why would you think that?

adonis10

getmore4less wrote: »

Why would you think that?

Why not? Can’t find anywhere that says the whole allowance is available even if only a part share is owned. Or is it on the absolute value in £ terms rather than holding?

Tom99

adonis10 wrote: »

Why not? Can’t find anywhere that says the whole allowance is available even if only a part share is owned. Or is it on the absolute value in £ terms rather than holding?

It is capped at the value of the residential interest you own be it 100% or 10%, as long as its your residence, or a greater amount if you can use the downsizing allowance

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.

I've been doing some reading up on the subject and it looks like it can get absurdly complicated, however it would seem that £100k could be transferred as her spouse died in Dec 2017 and that gets added to her RNRB. Let's assume the time comes that she passes on in 2019/20 when the allowance is £150k, simple maths suggests that up to £250k is available; assuming her share is still worth £170k the RNRB is then capped at £170k and added to the basic allowance of £650k giving a total allowance of £820k and no IHT to be paid.

Given what I have read, the above calculation seems far too simple and there must be more to it!

Tom99

adonis10 wrote: »

I've been doing some reading up on the subject and it looks like it can get absurdly complicated, however it would seem that £100k could be transferred as her spouse died in Dec 2017 and that gets added to her RNRB. Let's assume the time comes that she passes on in 2019/20 when the allowance is £150k, simple maths suggests that up to £250k is available; assuming her share is still worth £170k the RNRB is then capped at £170k and added to the basic allowance of £650k giving a total allowance of £820k and no IHT to be paid.
Given what I have read, the above calculation seems far too simple and there must be more to it!

[FONT=Verdana, sans-serif]No, its the RNRB at the time of the 2nd death so 2x£125k now but 2x£175k after 5/4/2020.[/FONT]
[FONT=Verdana, sans-serif]It sounds like the downsizing rules might apply, was the house sold in 2018 wholly owned by her and what was the sale price?[/FONT]
[FONT=Verdana, sans-serif]Not needed at the moment but if the cash eventually exceeds £650k it will be.[/FONT]