Joint tenants and PNRB

Goodcitizen1

My father died in 1999 and used 100% of NRB at that time. My parents owned their home and it was sold in 2006 and my mother bought another property. This was sold in 2012 and she moved in with us. In 2014 we bought another property as joint tenants 1/3 share each between myself, my husband and my mother. She lived there with us. My mother passed away this year. The residue of her estate passes to me, her only child. The value is approx £800000 and her share of the house is worth £210000.

So she can claim NRB of £325k plus PNRB. Will PNRB be capped at £105k as I only inherit half her share, because it passes as joint tenants?

Can we use any of my father's PNRB or can this only be used against the value of property in the estate not other assets?

Could we change the ownership of the house before applying for probate to tenants in common, thus giving me £210k of house value and claim her PNRB and all or part of father's PNRB?
I have read many articles but can't get clarity.

Keep_pedalling

The house will have passed to the surviving owners on her death so it is not possible to change to TiC retrospectively. I suspect you are correct about only being able to claim 1/2 the value because halve goes to your spouse, in which case you can’t your father’s RNRB as your mother’s allowance already covers the share of her house going to you.

buddy9

Property that passes by survivorship can be the subject of a deed of variation. Could your spouse pass her survivorship share of the house to you by DoV? Would this allow £210k of RNRB to be available?

Keep_pedalling

buddy9 said:

Property that passes by survivorship can be the subject of a deed of variation. Could your spouse pass her survivorship share of the house to you by DoV? Would this allow £210k of RNRB to be available?

Interesting, I did not know that to be the case. That would also require the tenancy to be split with the OP owning 2/3 and her husband 1/3. 

Goodcitizen1

My husband would be happy to allow his third to go to me and then we can then move back to joint tenants when the estate has been settled as a spousal transfer, I would think.

So to clarify, without being able to change the way the property is passed, we cannot use father's PNRB. It can only be used for property assets? I have read somewhere that a transferred PNRB can be used for other assets, but is that only if downsizing after 2015 has occurred?

Keep_pedalling

Goodcitizen1 said:

My husband would be happy to allow his third to go to me and then we can then move back to joint tenants when the estate has been settled as a spousal transfer, I would think.

So to clarify, without being able to change the way the property is passed, we cannot use father's PNRB. It can only be used for property assets? I have read somewhere that a transferred PNRB can be used for other assets, but is that only if downsizing after 2015 has occurred?

You can use part of the transferable RNRB to cover the value over £175k of the property but you can’t use the remainder for any other assets.

Goodcitizen1

Thank you for all your clarifications. Do you think I have to wait for Land Registry to be changed (assuming this is possible) before I apply for probate?

Keep_pedalling

Goodcitizen1 said:

Thank you for all your clarifications. Do you think I have to wait for Land Registry to be changed (assuming this is possible) before I apply for probate?

I would not delay too long, IHT needs to be paid within 6 months. As long as you have got the DoV drawn up and have applied to the LR I would submit the probate forms.

Goodcitizen1

I am now completing the forms, having waited more than 6 weeks for all of those needed to be sent by HMRC. (I don't have a printer and needed lots of schedules). On reading IHT435, note 3 states that the spouse of a direct descendant is also classed as a direct descendent, so we can use all of my mother's PNRB and some of my father's unused PNRB.
I thought it was worth clarifying in case anyone else is ever in a similar situation and the rule is very well buried!