inheritance tax question re house 20 January at 4:16PM in Deaths, funerals & probate 3 replies 359 views

Gnoley

Hello all. My query is around inheritance tax . My mother is about to move in sheltered housing. She owns a small house, valued around 160K. My father died in 2014 so she is sole owner.  If the house is sold to pay for some of her sheltered housing costs, does that mean that the money she will leave are all taxable, after the threshold of 325K is reached?  Would it be better therefore to keep the house and rent it out? 

Flugelhorn

there is something about previously having owned a property or downsized - have a read here https://www.gov.uk/guidance/how-downsizing-selling-or-gifting-a-home-affects-the-additional-inheritance-tax-threshold#selling-or-giving-away-a-home

p00hsticks

did your father leave everything to your mother ? If so she inherits his £325k allowance, so unless her estate is likely to exceed £650k you really don't need to worry about the additional Residential Nil Rate Band - although as Flugelhorm points out, that woudl still be available if the home is to be sold so as to downsize or move into care.

Gnoley

Thanks both, very useful.