Residential nil rate band transfer

tiengomar

Hello,

I have a query on the transfer of residential nil rate band;

If spouse A owns a property solely and dies and leaves everything to spouse B. Spouse B as already has a property in his own name

Once spouse B dies can their son who is also the executor claim the transfer of spouse A rnrb and also claim the rnrb for spouse B? Or would this fail has spouse A did not leave the property to children.

Thanks

naedanger

Yes it can be transfered.

Is your concern that spouse A's property is not the property that is being left to the children on spouse B's death? If it is then note: "The home that the surviving husband, wife or civil partner leaves to their direct descendants does not have to be the same home that they lived in with their partner to either qualify for the RNRB or to transfer it."
source: https://www.gov.uk/guidance/inheritance-tax-transfer-of-threshold

getmore4less

if A does not use their RNRB it can transfer to B
Then B had double allowance to use against qualifying assets to qualifying descendants.
B gets to chose one property to use against the allowance not both.

How much are the houses worth?

tiengomar

getmore4less said:

if A does not use their RNRB it can transfer to B
Then B had double allowance to use against qualifying assets to qualifying descendants.
B gets to chose one property to use against the allowance not both.

How much are the houses worth?

spouse a home worth 85k. this is going to spouse and not children

spouse b home worth 150k

naedanger

In that case there is no point transferring spouse A's residential nil rate band. Not because it cannot be transferred but because the residential property being left to the direct descendants is worth less than £175,000. (Only if Spouse B's property had been more than £175,000 would be need to transfer spouse A's residential nil rate band.)

I don't suppose spouse B recently downsided their property?

Tax is payable on B's estate if there is more than £800k (being £325k + £325k + £150k).
  

getmore4less

tiengomar said:

getmore4less said:

if A does not use their RNRB it can transfer to B
Then B had double allowance to use against qualifying assets to qualifying descendants.
B gets to chose one property to use against the allowance not both.

How much are the houses worth?

spouse a home worth 85k. this is going to spouse and not children

spouse b home worth 150k

The max RNRB available will be £150k  when B dies(or house with highest value at the time).
A's RNRB won't be needed on B's death.
it could be utilised by transferring that house to a qualifying beneficiary as part of A's estate. 

tiengomar

naedanger said:

In that case there is no point transferring spouse A's residential nil rate band. Not because it cannot be transferred but because the residential property being left to the direct descendants is worth less than £175,000. (Only if Spouse B's property had been more than £175,000 would be need to transfer spouse A's residential nil rate band.)

I don't suppose spouse B recently downsided their property?

Tax is payable on B's estate if there is more than £800k (being £325k + £325k + £150k).
  

apologies, i did not state that spouse a downsized from a 265k property in 2018 to the smaller one so I guess there may be a downsizing allowance. My question is, if this is transferrable, does the transfer hinge on spouse A's property going to the child immediately rather than to spouse B?

getmore4less

tiengomar said:

naedanger said:

In that case there is no point transferring spouse A's residential nil rate band. Not because it cannot be transferred but because the residential property being left to the direct descendants is worth less than £175,000. (Only if Spouse B's property had been more than £175,000 would be need to transfer spouse A's residential nil rate band.)

I don't suppose spouse B recently downsided their property?

Tax is payable on B's estate if there is more than £800k (being £325k + £325k + £150k).
  

apologies, i did not state that spouse a downsized from a 265k property in 2018 to the smaller one so I guess there may be a downsizing allowance. My question is, if this is transferrable, does the transfer hinge on spouse A's property going to the child immediately rather than to spouse B?

If A downsized  then that downsize uplift does not transfer if not used, it gets lost. 
The RNRB does transfer if not used.

Once the RNRB transfers to B it becomes theirs for use on their eligible asset and beneficiaries.  

tiengomar

but is the transferred allowance from spouse A and allowance available to Spouse B limited by the fact that spouse B then needs to nominate the property it applies to or can then difference between the RNRB allowances then be applied to the rest of the assets held by Spouse B?

naedanger

tiengomar said:

but is the transferred allowance from spouse A and allowance available to Spouse B limited by the fact that spouse B then needs to nominate the property it applies to or can then difference between the RNRB allowances then be applied to the rest of the assets held by Spouse B?

If I am understanding your question correctly then yes to the first part and no to the second part. 

tiengomar

ok many thanks for all your replies.
so the best solution appears to be that it would be worth making a deed of variation to redirect home of spouse A to child and claim downsizing allowance and transfer this to surviving spouse.