Selling my Nan’s house

snowball3

My Nan is 101 yrs old and hasn’t lived in her own home for the last couple of years. My mum and uncle have been taking care of her. Two weeks at one and the two weeks at the others. She owns a home which is not near to either my mum or uncle. They are considering selling it. The house is worth around £450k. She has no other savings as such. My mum and uncle are both in their mid to late 70’s and are finding it a struggle to look after the house hence selling it. My Nan lost her husband 30 odd yrs ago. I understand that if they kept the house until she died inheritance tax would not apply. Would just the first £325k be tax free or would her late husbands tax free amount be taken into account? 

Brynsam

Good news on two fronts. Yes, your grandfather's tax free amount at current (£325K) rates would transfer to your nan, but it is likely HMRC will request sight of his will/grant of probate - which might be tricky, especially after so long.

However, even if the house is sold, your mum and uncle may still be able to claim 'extra' on top of your nan's own £325K IHT allowance. See https://www.tax.service.gov.uk/calculate-additional-inheritance-tax-threshold

Keep_pedalling

Her residence nil rate band would also apply even though she has moved out and the house is like to have been sold by the time she dies. Together with her NRB this gives her estate a £500k tax free exemption in her own right. Moving into care, sheltered accommodation or to be cared for in the home of relatives does not remove the RNTB. 

Does your nan have lasting powers of attorney in place?

snowball3

Brynsam said:

Good news on two fronts. Yes, your grandfather's tax free amount at current (£325K) rates would transfer to your nan, but it is likely HMRC will request sight of his will/grant of probate - which might be tricky, especially after so long.

However, even if the house is sold, your mum and uncle may still be able to claim 'extra' on top of your nan's own £325K IHT allowance. See https://www.tax.service.gov.uk/calculate-additional-inheritance-tax-threshold

Thanks. I will ask them if they have my grandads will or grant of probate, you never know they may have kept it.

snowball3

Keep_pedalling said:

Her residence nil rate band would also apply even though she has moved out and the house is like to have been sold by the time she dies. Together with her NRB this gives her estate a £500k tax free exemption in her own right. Moving into care, sheltered accommodation or to be cared for in the home of relatives does not remove the RNTB. 

Does your nan have lasting powers of attorney in place?

Yes she does have power of attorney in place. So even though she will have sold her house she is still classed as having a property?

it is really good news that she probably won’t have to pay iht.

Thanks for your help.

getmore4less

read up on the downsizing and selling rules for residential nil rate band, there are some complication but from what you have said  it is likely no IHT on an estate under £500k and some of that money can be spent on her care(even if staying with family).

Robert_McGeddon

OP, not directly related your question, but who is set to inherit your Nan's house? At £450K it would bump up their assets and maybe create an IHT liability in the near future. Might be worth thinking about.

snowball3

Robert_McGeddon said:

OP, not directly related your question, but who is set to inherit your Nan's house? At £450K it would bump up their assets and maybe create an IHT liability in the near future. Might be worth thinking about.

It is my mum and uncle. I was going to ask the question can my Nan give them the money now and what implications could that bring? Obviously they would need to save some in case her was to need outside care. 

Linton

snowball3 said:

Robert_McGeddon said:

OP, not directly related your question, but who is set to inherit your Nan's house? At £450K it would bump up their assets and maybe create an IHT liability in the near future. Might be worth thinking about.

It is my mum and uncle. I was going to ask the question can my Nan give them the money now and what implications could that bring? Obviously they would need to save some in case her was to need outside care. 

Nan could give them the money now.  However it would have no effect on IHT were any to be due unless Nan survived 7 more years as the gift would be taxed as if it were still part of her estate.  Also the gift would not enable Nan to claim she was poor and in need of council support for her care home fees.  So there would seem to be little point.

xylophone

 The Attorney (s) might open an NS&I income bonds  account in Nan's name  - the sale proceeds could be safely held there and earn monthly income to supplement Nan's pension.
https://www.nsandi.com/income-bonds

snowball3

Linton said:

snowball3 said:

Robert_McGeddon said:

OP, not directly related your question, but who is set to inherit your Nan's house? At £450K it would bump up their assets and maybe create an IHT liability in the near future. Might be worth thinking about.

It is my mum and uncle. I was going to ask the question can my Nan give them the money now and what implications could that bring? Obviously they would need to save some in case her was to need outside care. 

Nan could give them the money now.  However it would have no effect on IHT were any to be due unless Nan survived 7 more years as the gift would be taxed as if it were still part of her estate.  Also the gift would not enable Nan to claim she was poor and in need of council support for her care home fees.  So there would seem to be little point.

I realise that it won’t benefit her in the ways you said above. Is there any monetary reasons that she shouldn’t do it ( not saying she will). There are things I’m my mums home, like a having a walk in shower, which would really help her. The house is all she has. No savings as such. Thanks for your help.