Inheritance Tax Query

Gibbi88

Hi i hope im posting in the right department. Im looking for some advice on inheritance tax , my father died back in 2014 and left everything to my mum , back in 2017 my mum was taking into care for dementia and died last year. I was currently renting out there house to help pay care fees the tenancy is now up so im currently looking at selling the property. The property is worth around £400,000 and understand that the threshold for tax is £325,000 but i have read online that there can be a main residence allowance of £150,000 im not quite sure if this applies. In my mothers will there are just me and my brother that the estate is left too. Could anyone shed some light on this please. Thanks alot really appreciate it.

Linton

If your father left everything to your mum his allowance is transferred to her. Therefore it would seem there is more than enough allowance available to avoid any IHT.

Rodders53

Dad had an IHT allowance not used when everything went to Mum, so double the £325k = £650k. The main residence bit is an extra £150k each in the current tax year so that makes £950k if you need that.

It all depends on the total value of the Estate(s) and if anything was left by Dad to anyone other than Mum.

The guidance notes on the .gov website for probate applications are pretty good. It should be possible to d-i-y probate if there's a Will (and you are named executor) or even if intestate (when it's letters of administration).

Gibbi88

Ok thanks for your replies, one thing i didnt mention which i dont know if it would make a difference, in my dads will half of the house was left to me and my brother so in the case of going into care the council could only take half of the house worth, would that make a difference to the threshold? Thanks again

Keep_pedalling

Gibbi88 wrote: »

Ok thanks for your replies, one thing i didnt mention which i dont know if it would make a difference, in my dads will half of the house was left to me and my brother so in the case of going into care the council could only take half of the house worth, would that make a difference to the threshold? Thanks again

Effectively no. Although that reduces the amount of nil rate band that can be transferred it also reduces her estate by £200k.

Gibbi88

Ok thats great. Thanks alot

Savvy_Sue

It may, however, mean there's Capital Gains Tax to pay when you sell the house, depending on any increase in value.

Keep_pedalling

Savvy_Sue wrote: »

It may, however, mean there's Capital Gains Tax to pay when you sell the house, depending on any increase in value.

Although hopefully this was a professionally drawn up will and done with a life interest trust, which would avoid any CGT issues.