C1 Confirmation Scotland - House mentioned in will but previously transferred.

ptolemy

I am executor on my mother's will trying to get confirmation and currently writing up the C1 form.
She/we live in Scotland.
In my mother's will, dated 2016, she states that her son, me, should inherit the house, however, the house was actually transferred to me in 2006.  I mentioned this to the solicitors after I read the will, after it had been completed, and they said that it would 'fall out' so no need to redo.  My problem now is how to address this issue on the c1 form.  I have the Sassines registration.  Do I simply say in the inventory that it was previously transferred hence has a value of zero? or do I not need to mention anything and just say zero?   I assume as it is mentioned in the will I have to say something.

Keep_pedalling

Have you also been living in the house since it was transferred to you? If not the full value of the house still forms part of her estate for IHT purposes as, unless she was also paying you the full market rent, this is classed as a gift with reservation. This also means you can’t claim the residential NRB, and will probably have a substantial capital gains liability if you sell the house.

ptolemy

Thanks for the fast reply.  Not sure that I understand the implications.  Yes, we have been living in the house, actually caring for my mother, but no-one has been paying rent.  There is no intention to sell the house.  The value of the house is nowhere near any capital gains threshold.

ptolemy

and what is 'residential NBR'?

Keep_pedalling

ptolemy said:

Thanks for the fast reply.  Not sure that I understand the implications.  Yes, we have been living in the house, actually caring for my mother, but no-one has been paying rent.  There is no intention to sell the house.  The value of the house is nowhere near any capital gains threshold.

Has this been you home since 2006? Do you also own your own property! Don’t confuse CGT with IHT your annual CG allowance is only £12,300 and the gain in value over 18 years is likely to be far higher than that.

Keep_pedalling

ptolemy said:

and what is 'residential NBR'?

The residential NRB applies to anyone leaving their home to a direct descendant and provides an IHT exemption of £175k, taking the total exemption to £500k. A widow / widower’s estate can also transfer over the same from their spouse.

ptolemy

This is the only property I have owned.  I have worked elsewhere and rented there but always considered the property 'home' and our base.  I have been 'renovating' the place over the years whilst my parents lived in it.  My wife and I moved into the property permanently two years ago, and, coincidentally, started caring for my , by then, disabled mother. 

buddy9

Here is my understanding.

The house would not be included in the C1 inventory because it is not part of the estate for confirmation at death.

However, you will need to determine what the inheritance tax implications are for the completion of page 5 of form C1 .  (IHT 'gift with reservation' as discussed by 'keep pedalling' above).

Keep_pedalling

ptolemy said:

This is the only property I have owned.  I have worked elsewhere and rented there but always considered the property 'home' and our base.  I have been 'renovating' the place over the years whilst my parents lived in it.  My wife and I moved into the property permanently two years ago, and, coincidentally, started caring for my , by then, disabled mother. 

As this has been your residence then CGT will not be an issue even if you planned to sell it. What you put on C1 is a bit more complicated. As your mother continued to benefit from the asset after gifting it to you then at least part of it remains in her estate for IHT purposes. You may need to take professional advice on this, but if the value of her estate including the house is below her NRB + plus any unused NRB from her husband then the simplest and safest thing to do may be to declare the full value of the house.

ptolemy

Yes, thank you very much for this - it was the conclusion I was coming to.

ptolemy

Ah, I missed buddy9's comment.  A bit confused  now.  I assumed Keep_Pedalling was talking about putting the full value in the inventory.